Isn’t pension and gratuity to some extent meant for retirement? Why should I bother creating a separate retirement fund?
If you are planning to rely just on pension and gratuity money for your sunset years, you are walking a high risk path. While pension money is devised to offer you financial support when you are not working, the money is likely to be insufficient for your needs when you consider the rise in inflation. Old age brings with it a number of challenges like medical emergencies and other expenses. Just by relying on your gratuity or pension money is like aiming at a dartboard with a blindfold over your eyes.
There’s a possibility that the pension that you will receive might not be enough to run a household many years down the line. For instance, a pension of Rs. 30,000 might seem like a lot today but might be the equivalent of only Rs. 10,000, 20 years down the line. It’s important to take into account the time value of money when you want to know whether your pension will suffice. Let us assume you are 30 years old and plan on retiring in another 30 years. Let us also assume your yearly expenses are Rs. 4,80,000. You incur medical expenses of Rs. 25,000 per year and you plan to go on pilgrimages and vacations for which you think you will spend Rs. 2 lakhs (at today’s prices). Based on these figures, how much will you need on retirement? Believe it or not, you will need approximately Rs. 5.9 crore. Yes, it’s true, especially if you consider inflation to be about 6%. In fact, you will need Rs. 5 crore for your monthly expenses alone.
So, you must plan for your retirement as soon as you start working. Read this blog post for more information - https://blog.bankbazaar.com/your-way-to-retirement/.
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