According to news published by The India Times on May 15, 2017, the average life expectancy at birth in India has drastically increased to 71 years, from 53 years just 20 years ago. Thanks to the commendable improvement in medical technology, life expectancy at birth for men is higher at 77.2 and 78.6 for women. But let’s face the fact. What will you do during your twilight years, given that now you can expect a longer retirement period with no regular income, most of us not saving for retirement and many not even knowing what a basic pension calculator is.
In 2016, there were 51.1 million men and 52.8 million women in India over the age of 60 years, according to data published by the Ministry of Statistics and Programme Implementation. India is losing its tradition of joint families, with more people leaving home to join the workforce every day. So, who is left behind to take care of aging parents? Moreover, with the rising cost of living, today’s generation finds it a financial burden. This only goes to emphasize the importance of ensuring a pension. A pension calculator is a good way to determine the sum you need to save during your youth to survive post retirement, without depending on anyone.
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Shrinking Working Years
When compared with our fathers and grandfathers, who started earning as young as 16-20 years, today’s generation is entering the workforce mostly at an age of 25 years or more. It is not because they are wasting their time, instead they are busy meeting the demands for higher education. Moreover, prevailing health issues, excessive stress due to work pressure or the aspiration to follow their heart, all come together to compel many to retire as early as 50 years. But most forget the fact that a shorter working life means a longer retired life. It, thus, becomes necessary to carefully plan your finances and save more than expected to survive those many years.
Longevity Risks
Looking at the statistics above, you might think that you have enough to last you till you are 70-75 years old. But what if, due to the availability of better medical care, you outlive that age by a decade or more? According to a common myth, many believe that in old age, daily expenses decline, since you no longer have expenses like the education and marriage for your children and transportation costs. However, have you considered the fact that apart from the impact of inflation, you also are likely to have higher medical bills, since health is bound to decline with age. You can estimate how much you need for such time and plan better for your retirement using a pension calculator.
Those who are spending their savings on everyday expenses also need to prepare for a time when they exhaust their savings. However, if you have started investing early in life and have chosen reliable instruments, such as pension or annuity plans, longevity might be a welcome situation. In fact, the longevity risk eventually results in higher pay-out ratios than expected for many insurance companies and pension funds.
When using an online pension calculator for retirement planning, identify your current expenses and then project them to the future to determine your exact financial needs. Protect your future now, before it is too late.