For the past 12 days, France has been burning. Surprisingly the issue is seemingly an innocuous one. The French Govt has increased the retirement age from 62 Years to 64 Years in order to control the burgeoning pension bills. France spends almost 15% of its budget on pensions and has one of the best pension systems in the world for pensioners. For the majority of French people the increase in the retirement age is non-negotiable as they pride in their family and work life balance.
But the issue here is not about France. My discussion is about the correct retirement age if there is any!
For most of the Govt servants in India, the craving is generally to increase the retirement age. I remember a few years back, when the Govt of MP had increased the retirement age of Govt employees from 60 to 62 years, there was joy in my uncle’s family. So the reaction of the French people seems odd to us who are opposing the increase in retirement age. But then the situation is quite different there.
When financial planners develop a financial plan for a client, one of the big talking points is the retirement age. Many people working in highly stressed private companies complain about burnouts and want to retire as early as possible so much so that some people express the desire to retire at 45 itself. Some, however want to continue beyond 60 and possibly till 70 and beyond.
In India, 60 is considered the retirement age and most people have the mindset to retire at this age. But we need to be mindful of the fact that this retirement age was set around 100 years ago, when the life expectancy was not even 60 years. Now with better medical facilities, one can easily expect to live till 85 and above. Which means if you are retiring at the age of 60, then you have to support yourself and your spouse for roughly 25 years without fresh income. This is a very long period for a pension fund to last. Further the bad news is that, more than 90% people in India don’t make any provision for their pension fund. So, one can imagine the plight of the people especially in the era where family financial support is shrinking and Govt is not providing any financial support unlike in France and other western countries.
So, the moral of the story is to do your retirement planning immediately even if retirement looks far away. Also, make yourself physically fit so that you can prolong your retirement if need be which is most likely for most. Physical and mental fitness will also help you in reducing your medical bills.
Let the French people fight it out with their Govt, we need to make the plan ourselves in order to enjoy a self-reliant and dignified retirement.
Manoj Pandey
CFP
