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Retirement Insurance

Dual Retirement – Your One and Only Safety Net after 60

With life expectancy in India touching 80 – 85 years, retirement planning takes on a whole new meaning. While generations before us had to plan finances only until 70, the current generation has to plan finances for at least 20 – 25 years after retirement.

Let’s have a look at some quick (and scary) numbers:

  • When Mr. X retired in the year 1998, the retirement age at that time was 60 years while the life expectancy was averaged at 70 years. This means that Mr. X had only 10 years of non-earning life.
  • Early this year (2018), when Mr. Y retired, the retirement age stood at 60 again, while the life expectancy for this year has been averaged at 80 years, which is 10 years more than what it was 20 years back. This leaves Mr. Y with 20 years of non-earning life. A little scary, right?
  • Twenty years from now (2038), when Mr. Z will retire, the retirement age would probably still be stuck at 60 years while life expectancy would be somewhere around 90 years. And that would leave Mr. Z with 25 – 30 years of non-earning life. This is VERY scary. Not for all, though; it's scary only for those who haven’t started planning for their retirement.

Why Should I Worry about Life Expectancy?

When 60 was decided to be the retirement age, life expectancy for an Indian was 67 – 70 years. Retirement funds at 60 were enough for 7 – 10 years. However, in the last 10 – 15 years, technological and medical advances in India have increased life expectancy to close to 80 years. Every 10 years, life expectancy increases by 5 years due to new medical technologies that are successful in extending life. Without proper financial planning, there will be no funds left to enjoy all of your retirement years in comfort.

Do you think your current retiral benefits and investments will be sufficient to sustain 20 – 25 years with the same lifestyle and luxuries you currently enjoy?

So, What’s the Solution?

Planning for the first retirement at 60 is great, but planning for a second retirement at 70 – 75 is just as important. EPF and other investments will not sustain for 20 – 25 years, and being dependent on others (including children) during retirement is something to be avoided at all costs.

This is why it is necessary for one to create a safety net well in advance. There are several plans available in the market that allow you to start investing systematically for a fixed term and mature when you are close to 70. Let’s see some real-world examples (figures taken from leading plans):

  • Ramesh, who is 40, opts for a participating endowment plan and begins investing Rs 8,000 per month until he is 50. When he is 70, he receives INR 39,87,272 at 8% RoI. Not only that, if he would have met an untimely death during the policy term, his family would receive INR 8,39,179 as death cover.
  • Suresh, who is 45, chooses another participating savings plus protection plan and starts investing Rs 10,000 per month for a period of 18 years. When he is 75, he receives INR 55,92,847. Suresh’s nominees would receive INR 14,26,200 in case he meets an untimely end.

These instruments not only protect your retirement future but also assure your family is taken care of financially should anything untoward happen to you.


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