Reflect n Grow

As I was reflecting on my own retirement, there are some ideas and insights that transformed my way of thinking about retirement finances. I put together these thoughts under three distinct headings or pillars that serve as the guiding principles for my course:

Pillar 1: Earn your expenses till you live!

The biggest challenges in retirement are not financial but  they do have a huge impact on your finances. Staying physically fit, mentally alert and socially connected are so important to lead a fulfilling life in retirement. 

There could be many ways you could achieve the above. The way I resolved this question was that I decided to do something that would help me earn my expenses till I live! Society will not pay us if we are not contributing meaningfully. By putting a simple target of earning my monthly expenses, I realised that it would force me to stay physically fit, mentally alert and also build the social connections that are so vital in retirement. 

Pillar 2: Managing your retirement corpus

This is the #1 question in your mind. First, what constitutes an ideal retirement corpus? Second,  if you have an adequate retirement corpus, how should you invest the same in a manner that reduces risk and at the same time keeps you ahead of inflation. Third, for those  of you who are fortunate enough to have created wealth far in excess of what you  need. In that case, what are the risks that you should be guarding against?

It is most likely that you  would have created you wealth by investing in property and equities. If that is the case, then your investment portfolio would reflect a skew towards property and equity. And if you would have suffered losses while investing in the equities or property, it is most likely that your investment portfolio would be largely in safer debt investments. 

And this is the real challenge! How can you get over your investment biases and create an investment portfolio that is most suited for you in your retirement years. 

This is the big focus on my course! 

Pillar 3: Forever SIP!

Once you start living off your retirement corpus, there is a big chance that some unforeseen events leads to large withdrawals and you find yourself in a situation that your retirement corpus is now inadequate to meet your regular expenses. 

To address this challenge, I created a simple concept that I call "Forever SIP". All you need to do is to gross up your regular expenses by 10%. If you estimate a monthly expense of Rs 100,000, you add another Rs 10,000 to it! This money can be invested in any investment of your choice and over time this can help you re-create a part of your retirement corpus. If you retire at 60 and with life expectancy of 90 years, you have another 30 years with you. So, treat investment as an expense! And let the magic of compounding do the rest!