Retirement
Financial Planner: Retiring early is a great thing to aim for.

Client reaction: Retiring early is a problem. Retiring at 52 will mean 45 years at home. This for my wife will mean more husband and less income! I have no hobbies, what do I do?

Americans at least need to develop some hobbies since their childhood. Not so for Indians. Among the many people I know I do not know of anybody with a serious hobby other than reading books or listening to music. It is doubtful whether anybody can do this for 45 years without getting bored. So get serious get a hobby! Ever since the retirement age was set at 58 years as the age you could retire, financial planners are trying to tell you ways of beating that deadline by quitting early. Retiring before you hit, say, 60, made sense a generation ago, when average life expectancy was still less than 70 years. (It is already 78 today.) And a longer life at home seemed attractive for people who led a simple life and did not look for so much action. If you cannot sit without half an hour without checking television, mobile phone, internet, or talking to somebody think what will you do for 38 years post retirement sitting at home.

Apart from boredom it is difficult to estimate the expenses of day to day living, medical expenses, returns on equities, overall portfolio returns, etc.

Action Plan: By delaying retirement just one year you could increase your annual retirement income by a nice number. Buy annuities on different dates – preferably spread it over 5 years – gives you a good interest spread. If you can hang on to your current high-paying post, great. Make sure you like your boss, his brother, his son, his wife and his girlfriend. This is especially true if you are working in a small family run business – or a big family run business.

The reality, of course, is that in an era of cost cutting, fighting brothers, greedy managers, etc. well-paid older workers are more vulnerable. And you might not want to stick it out any longer anyway if the severance is decent. But there’s much to be gained from finding another job, even if it’s a lower-paid or part-time position. If you can earn enough to avoid touching your capital till the age of 70 years, or dipping into your retirement accounts you can feel more secure.

Even though I have stuck my head out and said these are unusual times, if it happens again, you will be hit hard. If you can get some directorships (there is a huge shortage out there!) with medical cover you will be better off! As long as we do not have Long Term Care we should be worried about old age expenses.
Despite all those benefits, if you are still many years away from the retire-or-work decision, you should think of working longer – at least as a back up plan. As we noted, you won’t have complete control over your ability to work – your health or the job market could make it difficult. That means you can’t afford to assume that you’ll just work a few more years if things go wrong.