Retirement planning is one of the most important financial decisions a person makes in life. It has its own set of challenges, and if you don’t get your finances in order with smart planning and consistency, you’re unlikely to reach your retirement goal. When planning for retirement, one has a number of questions, including: Where to put money? How much and for how long?
Who better to answer these questions than those who have experience?
In the Retirement Planning Series, MintGenie interviews a retired senior citizen each week to explore how they planned for their retirement, the investments that worked for them, the ones that didn’t, the advice they have for younger generations, and more.
This week we interviewed Suresh Seshagiri, an HR consultant, to learn how he planned for his retirement and learn some lessons. While Seshagiri now runs his own recruitment firm called SVN Consultancy, he has previously worked with many well-known multinational companies.
One should live within their means and avoid taking risks as retirement approaches, says Seshagiri. Don’t look for quick money, he advises, adding that as much as possible, don’t borrow or lend.
Edited excerpts:
How did you plan for your retirement and did you follow through with that plan?
In my case, since I was working for a private organization, I didn’t know when I would retire, unlike government organizations. Although the general retirement age is 60, my tenure was extended beyond that age. Also, one cannot really predict how much they would earn in a private firm as there is no job security. Since I worked in a wind energy company, I had to face the brunt of the sector’s slowdown for about 10 years, which is why my income did not see a significant increase in the last three years. Hence, all my planning went to waste. However, the investments I made wisely in my early years helped me. I bought two houses and had settled my EMIs by then, which meant there was no rent to pay and we actually had rental income coming from the second house we owned, although the returns could have been higher if we had invested that money in options with higher interest rates. I also bought a piece of land which can generate some return on sale if needed.
What were the investments you made?
I avoided investing in stocks because I had burned my fingers in stocks once and because I don’t understand the markets beyond the fundamentals. I have made investments in FDs, National Savings Certificates, Fixed Deposits, Mutual Funds of well known companies. I invested in a ULIP plan where every year I invested ₹50,000 for 15 years. After 15 years I received a lump sum of ₹24 lakh from this investment. Similarly, I have invested in multiple FDs of different maturities as interest for senior citizens is usually higher here.
What do you think works best for retirement and what doesn’t?
In my opinion, even if the return is relatively lower than an investment, it’s fine as long as your money is safe. I have invested in FDs, mutual funds, postal scheme to make sure my money is safe. We have not exceeded a 9% rate of return on investment and have a steady stream of income through these funds. It is best to avoid taking risks as you approach retirement. In addition, retirees also need to look for work for several years after retirement in order to have a regular income and stay active.
Have you achieved your retirement goal?
As I mentioned earlier, I didn’t have a number in mind as I was in a private firm where, unlike public sector companies, there is a lot of uncertainty. There is always the risk of job loss.
What do you think are the most important factors to consider when planning for retirement?
First, there should be adequate health insurance to cover all the medical expenses that arise as you get older. One should have a minimum coverage of at least ₹10-15 lakh depending on their needs. Second, one needs to make sure they have a roof over their heads until retirement so they can save the amount they would otherwise spend on rent. It is also advisable to have your own vehicle as you get older because using public transport can be a hassle after a certain point. Another important thing is to have a stable monthly income through FD or some similar investments so that expenses can be met without financial stress. One important factor that cannot be overlooked is that you have saved enough for your children’s higher education or wedding expenses. Some of your investments should also be in gold as it is a safe investment option. And another investment should be in mutual funds. The idea is not to put all your eggs in one basket.
Any advice for GenZ on early retirement?
The most important advice would be “live within your means”. Don’t buy anything you can’t afford. Plan your savings in such a way that you have the income you want, not what you are forced to receive. After retirement, make sure that your expenses do not increase. Don’t look for quick money and take the help of good financial advisors. As much as possible, do not borrow or lend.
Women’s financial goals include retirement and buying a house