In every class on retirement planning one question which I always get a wrong answer is:

“Will you buy big assets like house, car, etc. AFTER you retire?”

It is met with an “obviously no. why do you even ask”. Well the obviously no is said and ‘why do you even ask is in the body language.

I tell them, if you get used to using a car for, say 3 years, you have a problem, do you not?

Let us say you retire at the age of 55 (highly probable) and live up to the age of 90 (sad, but again possible). This means you have about 35 years in retirement. If you use a car for say 5 years (instead of 3 at present) you will need to buy at least 5 cars (assuming you drive till 80, then, start using a driver). Also buildings that are constructed today may not last 35 years. So if you have bought a house when you are 45 years of age, that may last say for 35 years. So at your age of 80, you will have to BUY a new house!

This is not really palatable, right? Welcome to old age. Nobody said life is simple.

My father bought a house in Pune – Athashree (see www.paranjapebuilders.com) – which is a beautiful place for senior citizens to live. It has fantastic assisted living facilities.

My mom’s brother bought a place for himself in Coimbatore. My Mom’s sister bought herself a nice house in Bangalore – where they liked the weather compared to their Chennai residence. All of them were above the age of 70 when this 2nd house purchase was made. The funding came from their mutual funds, ppf, sale of equity shares.

All of them had kept their primary residence – just in case they had to come back!

So in your post retirement age you will end up buying at least one house, a few cars, a few mobiles, a few white goods appliances, a few vacations (optional), medical care, assisted living, long term care, etc.

The question is no loans will be available for these purchases. You will pay cash – and the cash will come from redeeming your mutual funds, ppf, ulips, equity shares, etc. So apart from providing for your food, medicines, etc. provide for purchase of all these assets.

The advantage that generation had was they did not see RE prices crash and leave them with assets at a diminished value. Internationally RE has done such things. So in 2014 you can find that assets are at the same price at which they were in 2004. This is called a time correction.

So imagine you are 74 yeas of age, you need to buy a new house and you are short of money. What will you do?

Move in with your children? Really?

Move into an old age home? I find many of my north Indian friends shocked that I even talk about old age homes! The south Indians are afar better prepared for that!

All the best!