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Pension or tension by Prashant Sawant

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Prashant Sawant
Prashant Sawant

The document discusses the importance of retirement planning for Indians. It notes that the number of elderly people in India is projected to rise significantly by 2050. However, most Indians do not adequately plan for retirement. This can result in financial difficulties later in life. Retirement planning is crucial now given rising healthcare costs, longer lifespans, and decreasing interest rates on savings. Starting retirement planning early and contributing regularly over many years can significantly increase funds available at retirement through compounding returns.

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Pension or Tension Retire happily . Retire = Death of income Latest UN report : The number of indians above 60 yrs is projected to rise by 55% by 2050.
3 idiots 1. How to buy all the expensive medicines Dr has prescribed ? 2. How to buy the expensive toy his grand-daughter wants ? 3. Sitting in Thomas cooks office, whether to go to Australia or Europe for holiday ? How soon & how much , will decide the above
Inflation = Bob Biswas ( Kahaani) Silent & ruthless Milk Rs 43/- litre will cost Rs 230/- per litre ( @6% inflation) after 30 years. Healthcare expenses 2% when u r 25 , will rise to 60% when u cross 60. Healthcare inflation is rising 3 times than WPI. Uncertainty of returns ( only exception JS)
Late start , bigger problem than uncertain returns. 10% people start planning for retirement in the first 5 years of their careers. 20% people have retirement plans in place by 10th year of their careers. Indians start thinking about RP when they are 30 yrs old. Actual implementation happens when they are nearing age 50. Magic of compounding
Magic of compounding 1 grain of rice / double every month Yr 15 = 6.5 Kg Yr 20 = 210 Kg Yr 25 = 6700 Kg Yr 31 = 2.15 L Kg
National Pension Scheme NPS is a social security initiative by the Central Government. This pension program is open to employees from the public, private and even the unorganized sectors. The scheme encourages people to invest in a pension account at regular intervals during the course of their employment. After retirement, the subscribers can take out a certain percentage of the corpus. As an NPS account holder, you will receive the remaining amount as a monthly pension post your retirement. Earlier, the NPS scheme covered only the Central Government employees. Now, however, the PFRDA has made it open to all Indian citizens on a voluntary basis. PFRDA ( Mr Supratim Bandyopadhyay, Chairman) The scheme is portable across jobs and locations, with tax benefits under Section 80C and Section 80CCD (1B)
Taxation You can claim any additional self contribution (up to Rs 50,000) under section 80CCD(1B) as NPS tax benefit. The scheme, therefore, allows a tax deduction of up to Rs 2 lakh in total.
Withdrawal Rules After 60 Contrary to common belief, you cannot withdraw the entire corpus of the NPS scheme after your retirement. You are compulsorily required to keep aside at least 40% of the corpus to receive a regular pension from a PFRDA- registered insurance firm. The remaining 60% is tax-free now. As a pension scheme, it is important for you to continue investing until the age of 60. However, if you have been investing for at least 3 years, you may withdraw up to 25% for certain purposes. These include childrens wedding or higher studies, building/buying a house or medical treatment of self/family, among others.
2 types of old people in world 1. Who live happily 2. Who live lonely & abandoned lives WHY ? Absence of regular income No identification with the older U ( oldify.app in iphone or old family album)
Regular income after retirement ? Total indians who are earning = 45 Crs People with jobs = 7.2 Crs Govt Jobs = 1.8 Crs Pvt jobs = 5.4 Crs Business = 23.85 Crs Daily wage earners = 13 crs 96% indians dont have pension facility.
Indian Outlook towards retirement planning Save for retirement Dont save for retirement Not aware about retirement planning Govt employees 20% 32% 48% Pvt sector employees 11% 26% 63% Businessmen 5% 28% 67% Daily wage earners 6% 31% 63%
Earlier generations didnt require retirement planning because . 1. Joint family system 2. Short life span after age 60 3. Higher rate of interests on investments
Things have changed now . Nuclear families Big strides in medical science Low rate of interests on investments Living too long is bigger problem than dying too young ( if retirement planning is absent)
Life span is increasing Modern medical facilities Earlier life expectancy was 67 yrs, now it is 77 yrs & is expected to touch 85 yrs by yr 2030. Committing suicide because of physical & mental pain ( if money for medication is not there) is crime in India.
Retirement planning is a MUST & should be done on yesterdays basis.
Myths about retirement
1. I can easily manage my retirement expenses Earlier times Working life : Age 18 age 60 ( 42 yrs ) Retirement life : Age 60 age 67 ( 7 yrs ) Future TENSE Working life : Age 25 age 55 ( 30 yrs ) Retirement life : Age 55 age 85 ( 30 yrs )
2.Expenses reduce after retirement Expenses Year 2000 Year 2015 Health 100 400 Electricity 100 266 Fruits, vegetables 100 717 Fuel 100 316 Gas 100 335 Grains 100 381
3. I can depend on my kids They themselves are struggling to float in this cut- throat corporate world. They themselves dont have job security. Their own cash flow can stop anytime. They are already over-leveraged. They have to run faster to stay where they are.
2.Expenses reduce after retirement 20 yrs ago , monthly budget of a middle class family= Rs 6,000/- Today = Rs 60,000/- 20 yrs later, Rs 6,00,000/- ???
4. Interest on my savings ROI in 1985 @18% ( Rs 1500/- pm interest on Rs 1 lac) ROI in 1995 @14% ( Rs 1166/- pm interest on Rs 1 lac) ROI in 2005 @11% ( Rs 916/- pm interest on Rs 1 lac) ROI in 2016 : @7% ( Rs 583/- pm interest on Rs 1 lac) ROI going down & inflation going UP ..
5. I will think about retirement when I am nearing retirement Age Retirement age Saving Window Monthly savings Maturity amount Loss due to delay 30 60 30 1ooo0 2,17,13,211 40 60 20 10000 75, 60,300 1,41,52,911 50 60 10 10000 21.03,740 1,96,09,471
Lack of retirement planning results in . Poor health No freedom No self-respect No satisfaction
Would u like to be burden on your kids after retirement ? Do u think your kids will take care of u ? Do u think your brother/sister & their kids will take care of u ? Do u think any other relatives of yours will take care of u ? Do u think GOI will take care of u ? Only (todays) U, can take care of (tomorrows) U.
Quotes from few retired people Lots of things were pending during my working life , I am going to enjoy them now. I want to take some rest now. I have to search for a new job immediately after retirement. Thought of retirement scares me. Unfortunately some people can never retire.
Few opinions of people on retirement planning Age Dialogue 30 Retirement planning & me ? R u mad ? 40 My father needs pension. Go & ask him. 50 My topmost priority today is my sons education & daughters marriage, everything else can wait. ( You can take loans for these milestones but no one will give you loan for old age expenses.) 60 Wish u had met me 20 yrs ago
Helpage India survey findings Old people above age 60 : 42% are insulted on daily basis 37.8% are verbally insulted 28.2% are ignored & are tortured financially Son & daughter-in-law are the biggest tormentors 53.4% cant answer to above insults Main reason for torture is property During golden years u r called rich, if u own property but u can only be free ( financially, mentally, physically etc) if you have liquid cash.
Your only true son ::: LIC Most trusted & only indian financial brand which is successfully & honestly operational for last 64 yrs. When you are investing long term ( invest for 30 yrs & get returns for 30 yrs) , you need a stable & 64 yrs young hand like LIC. U/s 37 of Life insurance laws , all the investments & committed returns are safeguarded & guaranteed by GOI.
Current age 25 50 55 60 Pension pm 25000 25000 25000 Investment pm 6000 4000 2200 Guaranteed BM 17 L + B 13 L + B 9 L + B Amount to Family 60 L 56 L 52 L Current age 35 Pension pm 25000 25000 25000 Investment pm 20000 11500 6600 Guaranteed BM 28 L + B 23 L + B 17 L + B Amount to Family 71 L 66 L 60 L
HAPPY GOLDEN YEARS Prashant Sawant Global Training Group, India 98204 08795 Prashantsawant.com

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Pension or tension by Prashant Sawant

  • 1. Pension or Tension Retire happily . Retire = Death of income Latest UN report : The number of indians above 60 yrs is projected to rise by 55% by 2050.
  • 2. 3 idiots 1. How to buy all the expensive medicines Dr has prescribed ? 2. How to buy the expensive toy his grand-daughter wants ? 3. Sitting in Thomas cooks office, whether to go to Australia or Europe for holiday ? How soon & how much , will decide the above
  • 3. Inflation = Bob Biswas ( Kahaani) Silent & ruthless Milk Rs 43/- litre will cost Rs 230/- per litre ( @6% inflation) after 30 years. Healthcare expenses 2% when u r 25 , will rise to 60% when u cross 60. Healthcare inflation is rising 3 times than WPI. Uncertainty of returns ( only exception JS)
  • 4. Late start , bigger problem than uncertain returns. 10% people start planning for retirement in the first 5 years of their careers. 20% people have retirement plans in place by 10th year of their careers. Indians start thinking about RP when they are 30 yrs old. Actual implementation happens when they are nearing age 50. Magic of compounding
  • 5. Magic of compounding 1 grain of rice / double every month Yr 15 = 6.5 Kg Yr 20 = 210 Kg Yr 25 = 6700 Kg Yr 31 = 2.15 L Kg
  • 6. National Pension Scheme NPS is a social security initiative by the Central Government. This pension program is open to employees from the public, private and even the unorganized sectors. The scheme encourages people to invest in a pension account at regular intervals during the course of their employment. After retirement, the subscribers can take out a certain percentage of the corpus. As an NPS account holder, you will receive the remaining amount as a monthly pension post your retirement. Earlier, the NPS scheme covered only the Central Government employees. Now, however, the PFRDA has made it open to all Indian citizens on a voluntary basis. PFRDA ( Mr Supratim Bandyopadhyay, Chairman) The scheme is portable across jobs and locations, with tax benefits under Section 80C and Section 80CCD (1B)
  • 7. Taxation You can claim any additional self contribution (up to Rs 50,000) under section 80CCD(1B) as NPS tax benefit. The scheme, therefore, allows a tax deduction of up to Rs 2 lakh in total.
  • 8. Withdrawal Rules After 60 Contrary to common belief, you cannot withdraw the entire corpus of the NPS scheme after your retirement. You are compulsorily required to keep aside at least 40% of the corpus to receive a regular pension from a PFRDA- registered insurance firm. The remaining 60% is tax-free now. As a pension scheme, it is important for you to continue investing until the age of 60. However, if you have been investing for at least 3 years, you may withdraw up to 25% for certain purposes. These include childrens wedding or higher studies, building/buying a house or medical treatment of self/family, among others.
  • 9. 2 types of old people in world 1. Who live happily 2. Who live lonely & abandoned lives WHY ? Absence of regular income No identification with the older U ( oldify.app in iphone or old family album)
  • 10. Regular income after retirement ? Total indians who are earning = 45 Crs People with jobs = 7.2 Crs Govt Jobs = 1.8 Crs Pvt jobs = 5.4 Crs Business = 23.85 Crs Daily wage earners = 13 crs 96% indians dont have pension facility.
  • 11. Indian Outlook towards retirement planning Save for retirement Dont save for retirement Not aware about retirement planning Govt employees 20% 32% 48% Pvt sector employees 11% 26% 63% Businessmen 5% 28% 67% Daily wage earners 6% 31% 63%
  • 12. Earlier generations didnt require retirement planning because . 1. Joint family system 2. Short life span after age 60 3. Higher rate of interests on investments
  • 13. Things have changed now . Nuclear families Big strides in medical science Low rate of interests on investments Living too long is bigger problem than dying too young ( if retirement planning is absent)
  • 14. Life span is increasing Modern medical facilities Earlier life expectancy was 67 yrs, now it is 77 yrs & is expected to touch 85 yrs by yr 2030. Committing suicide because of physical & mental pain ( if money for medication is not there) is crime in India.
  • 15. Retirement planning is a MUST & should be done on yesterdays basis.
  • 17. 1. I can easily manage my retirement expenses Earlier times Working life : Age 18 age 60 ( 42 yrs ) Retirement life : Age 60 age 67 ( 7 yrs ) Future TENSE Working life : Age 25 age 55 ( 30 yrs ) Retirement life : Age 55 age 85 ( 30 yrs )
  • 18. 2.Expenses reduce after retirement Expenses Year 2000 Year 2015 Health 100 400 Electricity 100 266 Fruits, vegetables 100 717 Fuel 100 316 Gas 100 335 Grains 100 381
  • 19. 3. I can depend on my kids They themselves are struggling to float in this cut- throat corporate world. They themselves dont have job security. Their own cash flow can stop anytime. They are already over-leveraged. They have to run faster to stay where they are.
  • 20. 2.Expenses reduce after retirement 20 yrs ago , monthly budget of a middle class family= Rs 6,000/- Today = Rs 60,000/- 20 yrs later, Rs 6,00,000/- ???
  • 21. 4. Interest on my savings ROI in 1985 @18% ( Rs 1500/- pm interest on Rs 1 lac) ROI in 1995 @14% ( Rs 1166/- pm interest on Rs 1 lac) ROI in 2005 @11% ( Rs 916/- pm interest on Rs 1 lac) ROI in 2016 : @7% ( Rs 583/- pm interest on Rs 1 lac) ROI going down & inflation going UP ..
  • 22. 5. I will think about retirement when I am nearing retirement Age Retirement age Saving Window Monthly savings Maturity amount Loss due to delay 30 60 30 1ooo0 2,17,13,211 40 60 20 10000 75, 60,300 1,41,52,911 50 60 10 10000 21.03,740 1,96,09,471
  • 23. Lack of retirement planning results in . Poor health No freedom No self-respect No satisfaction
  • 24. Would u like to be burden on your kids after retirement ? Do u think your kids will take care of u ? Do u think your brother/sister & their kids will take care of u ? Do u think any other relatives of yours will take care of u ? Do u think GOI will take care of u ? Only (todays) U, can take care of (tomorrows) U.
  • 25. Quotes from few retired people Lots of things were pending during my working life , I am going to enjoy them now. I want to take some rest now. I have to search for a new job immediately after retirement. Thought of retirement scares me. Unfortunately some people can never retire.
  • 26. Few opinions of people on retirement planning Age Dialogue 30 Retirement planning & me ? R u mad ? 40 My father needs pension. Go & ask him. 50 My topmost priority today is my sons education & daughters marriage, everything else can wait. ( You can take loans for these milestones but no one will give you loan for old age expenses.) 60 Wish u had met me 20 yrs ago
  • 27. Helpage India survey findings Old people above age 60 : 42% are insulted on daily basis 37.8% are verbally insulted 28.2% are ignored & are tortured financially Son & daughter-in-law are the biggest tormentors 53.4% cant answer to above insults Main reason for torture is property During golden years u r called rich, if u own property but u can only be free ( financially, mentally, physically etc) if you have liquid cash.
  • 28. Your only true son ::: LIC Most trusted & only indian financial brand which is successfully & honestly operational for last 64 yrs. When you are investing long term ( invest for 30 yrs & get returns for 30 yrs) , you need a stable & 64 yrs young hand like LIC. U/s 37 of Life insurance laws , all the investments & committed returns are safeguarded & guaranteed by GOI.
  • 29. Current age 25 50 55 60 Pension pm 25000 25000 25000 Investment pm 6000 4000 2200 Guaranteed BM 17 L + B 13 L + B 9 L + B Amount to Family 60 L 56 L 52 L Current age 35 Pension pm 25000 25000 25000 Investment pm 20000 11500 6600 Guaranteed BM 28 L + B 23 L + B 17 L + B Amount to Family 71 L 66 L 60 L
  • 30. HAPPY GOLDEN YEARS Prashant Sawant Global Training Group, India 98204 08795 Prashantsawant.com