Most of us cannot estimate our expenses at retirement. Even people who are now 80 cannot say with certainty how much money they need for the remaining part of their life. I was set to think by a tweet of a senior person in the asset management industry. I quote (please pardon me for the trumpeting of my book, just producing it verbatim..and as best practice masking the sender’s name.

My granny s one hospitalisation bill is more than Her lifetime savings Health Insurance Cover is so under rated

s emphasis on being ready for Retirement and his book “Retire Rich* is a Must Must Read

This tweet appeared yesterday…and many people must have seen it on Twitter.

Most of us are very poorly prepared for ‘Retirement’ and this includes people who have been in good finance posts! Why does this happen?

Simply because about 10-15 years ago longevity was not as big an issue as it is today. Even more bad news is that it is getting worse. More people are going to live beyond 100 years of age. Is it a big problem? Yes of course. In China we have 70 year old children killing their 96 year old parents – the younger old man is tired looking after his ‘Old man’ !! Of course people will run out of patience, and money to look after his parent who did not leave enough money for the upkeep.

Sorry for the digression. Re-read the tweet. One hospitalisation wiped out her entire savings. Luckily she has children and grandchildren who are well off and will pay for her future needs. WHAT IF SHE WERE SINGLE OR CHILDLESS? WHO will look after her in her old age – especially if she did not have insurance or a bank balance.

Some companies like Ashok Leyland gives medical cover for the employees for the rest of their lives, but most companies do not. Even worse, what about expenses that are not covered by insurance.

What if you have dementia + Alzheimers and are bed ridden for say 12 years? I am talking about a real life case, and hence he numbers may be a little imaginary, but the facts are not.

This couple were lucky to have a son, daughter in law, and 2 grandchildren willing to look after the man for 12 years. His wife could not have even thought of doing this. Their only asset was the house in which they lived – the other assets were whittled down long ago. Now look at the expenses:

2 nurses (day nurse and night nurse) – currently they cost about Rs. 1000 per shift in Chennai, Rs. 1200 in Pune, and about Rs. 1600 in Mumbai

Diapers – 3 a day – Rs. 250 per day.

Medicines – largely vitamin, blood pressure, and diabetes.

Now this comes to Rs. 3200 per day is Rs. 100,000 per month per person (if you have parents BOTH needing such service, God help you.

Diapers Rs. 7500 per month.

Hospital bed: Rent Rs. 6000 per month (guessing not sure)

Pulse monitor, gloves, powder (avoiding bed sores), ……..and a whole host of small needs which we ignore) Rs. 5000.

This totals up to Rs. 100,000+7500+6000+5000 = Rs. 120,000 per MONTH per PERSON.

This is not a small amount. In the tweet above the person says “Hospital …insurance”.

Of course medical insurance is important, but remember this amount of Rs. 120,000 per month for 100 months is Rs. 1.2 crores. Tough to believe right?

Now go figure how much will you pay for a supervisor who looks after this person in a Senior citizen facility.

Well Mr. Tweeter, these expenses are not even covered by medical insurance.

Simple. This money has to come from the wealth that you have created. Remember when me or other  writers say “You require 1 Million US $ for retirement” most people are in denial mode.

So the tweeter has to provide Rs. 1000 crores for Vi##an, for his parents, for his grandmother, and then of course for himself.

IF HE WERE TO PUT THIS AMOUNT IN A BASKET, it is EASILY the BIGGEST asset that he will ever buy – not his vacations, house, car, yacht…….!!