- Date : 15/11/2018
- Read: 4 mins
Here are some indications that you need to watch out for that may hamper your retirement goals
Bill Gates is reputed to have once said that being born poor is not a person’s mistake, but dying so definitely is. His contention: whatever the family situation may be when a person is born, it can never stop someone who’s truly motivated from trying to better his or her lot.
However, if the person dies poor, it would be because the right decisions were not taken, or there was not enough motivation to strive for better.
Going by this yardstick, how well are you placed? What are the odds that you may not be as financially comfortable as you may like to believe? There are some telltale signs that should worry you – if you’re smart enough to spot them. Let’s take a look.
Starting at the beginning: are you happy with a steady paycheck? If this is your comfort zone and you are content, it should be a warning bell: it reflects a lack of motivation to realise your true potential.
If you think your provident fund and bank savings are enough for retired life, think again – there is something called inflation. Use a retirement calculator to see how much you need to save to build the required retirement corpus. If you find it difficult, it is a sign you’re not on your way to wealth.
Do you struggle to make ends meet every month-end? If yes, this could be either a good or a bad sign. If you are short of ready cash around this time because you have invested heavily to meet your retirement fund, you are on the right track. If not, your shortfall could be due to one of these two reasons or both: your take-home pay is inadequate, and/or you spend recklessly.
What’s the solution? Either look for a job that pays more, or reworks your lifestyle so you can save more. MNYLNCAER India Financial Protection Survey reveals that only a miniscule 18.5% of India’s salaried population can be considered financially secure. Another survey shows that salaried earners save only around 7% of their income. If you belong to this class, you are unlikely to ever become rich.
Do you have too many loans? Many people fall in the ‘EMI trap’, having willy-nilly made credit cards and personal loans their lifeline; this is a sure sign that you will never be rich. Just so you know, getting out of this trap is not easy. Loans should have a purpose – say, to buy a home, educate your children, or meet an unexpected situation such as a medical emergency.
However, be cautious. Sometimes people buy a second house thinking this would increase their assets and help them save on taxes. But this could be fallacious, as it has been found that tax benefits on housing loans are often overhyped. Also, real estate is a tricky area.
You are in serious trouble if you have no financial goals, have not started investing, have no income-generating assets, focus more on saving than on earning to invest, and don’t care to know what a financial asset or what the difference is between saving and investing. If you’re fine all with that, you could end up borrowing when it’s time to get your kids married, or god forbid, to get by when you’re too old to work.
Even India’s central bank observed in a report: “Indian households tend to borrow later in life and are more likely to reach retirement age with positive debt balances, which is a source of risk given that they are no longer earning income during these years.”
Translation: if you fall in this category, you will never become rich.
Finally, health; if you are in a bad state health-wise, chances are that your savings will go to meet rising costs of healthcare requirements as you get older, when you are more vulnerable to multiple diseases. Thus, good health plays a big role in how financially stable you are in your old age. S. Premkumar Raja, Co-founder of Nightingales Medical Trust, was quoted recently by the Mint newspaper as estimating that 90% of retired employees in India survive on their savings, which get exhausted within a few years of retirement.