April 23, 2019

How well are you prepared for FORCED Retirement?

When we do the planning, the biggest priority is, of course, Retirement Planning. However, there are certain instances where you are FORCED towards your retirement. How well are you prepared for such unplanned retirement?

Retirement

The psychology of the common people is that they start to think about retirement when they reach the level of 35+ years of their age. The reasons are many for these. The one biggest reason is that they may be fed up with the pressure they are feeling in their profession.

What I noticed after working with many of my client’s profile is that slowly their retirement age is reducing from earlier 50+ years to below 50 years. It may be due to the pressure in many ways. However, the biggest risk they forget is how to fund the money for their LONG retirement period. Longer the retirement life higher the fund you need.

Early retirement is the BIGGEST dream. But sadly in many cases, it is not possible.

Now let us move on to the topic, for which I started this post.

How well are you prepared for FORCED Retirement?

We assume that we will retire by this age of that age. But what if you are forced to retire early? How well are you prepared? Let me give you certain examples and how they may also happen in your life.

# Professional Risk

Many IT guys nowadays facing this situation. They are sure that they may not end up working till 50+ or 55+ years of their age. It is because of the pressure they have to face in their profession. Also, even though they may feel fit to work, but their employer may tag them as UNFIT to hire such an old workforce.

It is because young guys are more enthusiastic than older, available at damn cheap price and may be updated their knowledge to the need of the hour. These may not be possible for 50+ years of aged professionals because of their age. Hence, you have to think about early retirement.

This professional risk not only associated with IT employees. Take for instance the recent news item about Jet Airways employees, who are forced to pledge their jewelry to stay float their ongoing expenses.

It may happen with any industry. Ups and downs in particular industry are part and parcel of the game. How well are you prepared for such unplanned or forced retirement??

# Health Risk

The second biggest concern for today’s generation is HEALTH. Because I noticed that many of us are practicing unhealthy or sedentary lifestyle.

Last month I met a client who is around 45 years of age and bedridden due to some diseases since 4 years. Luckily in his case, his wife is a Government Employee. However, being bedridden at such age is the biggest curse. How to manage such unplanned or forced retirement forever in your life? Are you prepared for this?

Creating wealth is one part and to enjoy the wealth you need a healthy body. If you are unfit, then no use of your wealth. Hence, concentrating on the health aspect is the utmost importance these days.

Whether you thought of a situation where because of your health issue, you are forced to retire early??

# Family Risk

You may not think on this right? Let me give you one example. Assume that your family constitutes of you, spouse and a kid. Suppose due to certain health issues, if any of the family members turned to be bedridden, then either you have to depend on nurse or maid to serve them or you are forced to leave your job to serve them.

If you are lucky enough to afford the cost of the nurse or maid, then FINE. Otherwise, one member of the family has to be with the patient always. Leaving the job may be of yours, your wife’s or your kid’s also.

This has exactly happened with one of my wife’s colleague. She was forced to leave the job when her husband turned bedridden due to illness. At the same time, to run the show, her daughter was forced to discontinue her study and search for the job.

Hence, because of certain family circumstances, you may be forced to leave your job. How well are you prepared for this?

# Your Hobbies

How your hobbies connected to retirement? Yes, in many cases they are. Take for example of a person who has a hobby of mountaineering. What if something went wrong and meet with an accident? How well are you prepared to live your future life by being bedridden or unable to work.

For example, if you are a software guy, then suddenly if something happens to your eyes or hands and forced you to discontinue the profession, then what you do?

Sometimes your risky hobbies may ruin your life forever and force you for life long unplanned retirement.

# Accidents

Health, hobbies issues are something different from accidents. Accidents may happen to you while traveling or in any means.

Suppose you met with an accident and faced a situation of partial or fully disable situation where you are unable to perform your professional duties, then without any options, you have to RETIRE.

How well are you prepared for such incidents in your life?

Conclusions:- I have updated the few instances, which I came across. However, there may be many reasons which are beyond our imagination. Hence, thinking about your retirement is a serious issue. Never ignore your retirement planning.

If a plan suggest you to invest monthly Rs.1,00,000 but if you are now capable of investing monthly Rs.2,00,000, then first divert this additional money towards retirement. Because who knows when our unplanned retirement may knock us right?

32 Comments

  1. Hi Basu ur post’s are informative. On this post of forced retirement, yes very true this can happen to anyone. Pl suggest how to cross this.

    Reply
    • Dear Deepak,
      Thanks and yes I will come up with another post where I will share you the suggestions.

      Reply
  2. Dear Mr.Basu,
    By seeing few comments from readers, Mentioned it was all negative situations you quoted. Actually Mr.Basu was trying to make readers understand that Instability of current life in so called modern era. And how well we are prepared to face that situation of forced retirement at any given time. If anyone wants to enjoy the peace of retirement at every moment, Please make it as a planned retirement but not a forced retirement. In worst case scenario, Even if it’s forced retirement you can able to continue your show with adequate funds if you have planned and invested well in advance. Thanks to Mr.Basu for another informative post.

    Reply
  3. I m passing throughthe same pain, a very timely posts…already working on to secure my retirement though no need as of now.

    Reply
  4. Hi Basavaraj,

    My uncle is in 30% tax slab and is a senior citizen who retires next year. He has no commitments and all children were settled and no loans or any financial hurdles. He wants to save tax as much as possible. His and his wife medical expenes covered by his organization too.

    Please suggest some tax options for 59 years old for this year

    Reply
      • Hi Sir,

        I have given all details with full background. Please tell me what else is required,?

        Reply
        • Dear Sandeep,
          With a mere few lines of sharing, I can’t judge the financial condition and suggest some readymade tips. Sorry…

          Reply
  5. Hi Basavaraj,

    I am currently investing in mutual funds .I will retire next year.Since Bank FD can guarantee upto 1 lakh as deposit insurance, i am planning to invest my retirement corpus in Post office time deposit as a lumpsum and take yearly interest from Post office time deposit .Then use that interest amount to do monthly SIP in mutual funds.The reason is Bank FD is not gauranteed.But please confirm Post office Time deposti FDs both Entire principal and interest is guaranteed or is there any risk like bank FD which has insurance upto 1 lakh?

    If no risk is there, i am planning to invest in Post office time deposit and take interest and do monthly SIP in Mutual funds.

    Regarding goals, i have no major goals currently , so planning to invest for 15-25 years in mutual funds for children future

    Reply
      • Hi Basavaraj,

        Are you serious sir? Sip will benefit from market fluctuations and everyone suggest SIP but why lumpsum?can you please explain.

        Also the principal is safe in post office time deposit unlike in FD where upto 1 lakh is given in case of crisis? please confirm whether principal is safe in Post office time deposit

        Reply
        • Dear Sandeep,
          In case of Post Office, YES. In case of SIPs, market will treat your SIP (accumulation) and lump sum in the same manner. Hence, don’t be in wrong assumption that by doing SIP, you are SAFE. It is how you manage the risk, that is most important like diversifying between debt and equity and yearly allocation. SIP is the trap generated by MF Industry and Advisers fraternity to make sure that they have a constant stream of income πŸ™‚ With the online adventure, within a few minutes you can easily finish the investment process, then why SIP?

          Reply
  6. Hey Basu, I think you managed to scare all of us at once πŸ™

    Reply
    • Dear Deba,
      Ha ha…no brother. These are all live examples of the few of my clients. It may happen to you and me also. Hence, we have to be well prepared.

      Reply
  7. Even though the author’s intention is understood, the way be has listed the reasons that will lead to forced retirement is not told in positive way.. Also he has not given how one should plan well for the retirement.

    Reply
    • Dear Thejasvi,
      Thanks for your inputs. The instances may be negative but may happen with anyone. Regarding the solution, wait for my next post.

      Reply
      • Where is solution? WHich Scheme should we purchase

        Reply
        • Dear Nikhil,
          Solution not with any particular scheme πŸ™‚ This is where we do the mistake.

          Reply
  8. Waiting for the ‘forced retirement part -2’ eagerly.

    Reply
  9. Invest 100000 for a month ..are you crazy

    Reply
    • Dear Ray,
      There are many who invest monthly 10 times of what you said CRAZY!!

      Reply
  10. Nicely explaned.. please suggest plan for managing this force or early retirement

    Reply
  11. Absolutely relevant and very informative . Thx to your services . You bring some very timely advice to many of us

    Reply
    • Dear Rajini,
      Thanks for your kind words. Suggest you to share the same with your known to spread this awareness.

      Reply
  12. This is Eyes opening article Basu, thanks for sharing such a good article

    Reply
  13. Nicely explained . Thanks for sharing such eye opening reasons for forced retirement.

    Reply

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