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ARE WE DESTROYING OUR FINANCIAL LIVES?

The majority of the working population of India is young today – between 25 to 35 age group and 7–8 percent of our population is above 60 today. Whereas in 2050, 20 percent of India’s population would be above 60. In 2050 i.e. one in five would be retired. From the following diagram, I found on Google

The median age of the Indian population which was around 26 in 2012 would be 37 in 2050.

What are the consequences?

The heavy burden of diseases – with an alarming rise in diabetes, cardiovascular diseases, obesity, Alzheimers, Cancers, etc, our retirement is going to be scary and tough.

Our generation would be heavily dependent on medical facilities, old age homes, children support and with the cost of healthcare skyrocketing, retirement will be tougher than one would have expected.

This demands two things, firstly the support ecosystem to cater needs of old age (i.e. hospitals, accessibility and inclusivity of the public spaces for aged population, old age homes, etc) secondly, the capacity of old population to bear the cost.

Old age poverty, destitution, and neglect – the majority of our population are not covered under any formal pension scheme. While today’s social structure still ensures that children and extended family look after the aged family members, this familial ecosystem is disintegrating very fast with the advent of the high cost of living, individualism, and the rise of capitalist society.

See the above graph, how many would be in the working population. With the advent of automation, artificial intelligence and break down of civic and social values, coupled with poverty and inequality,

India is not Japan and even Japan is finding it very tough to provide services to its aged population. Japanese all along the way assumed that their government would take care of them in their old age, but the government is simply not able to do so. Now they are trying to find alternative jobs for old age people to make them productive.

Can Indians be able to do any kind of work in their old age? Are our lifestyle, health, and environment good enough to ensure that we would have the energy to do any alternative employment in old age?

It boils down to the question of pension. We are not pensioned society. Neither our welfare works in the interest of the general population.

We are destroying our financial lives by postponing three things:
(1) Not saving/Investing enough for our retirement
(2) Ignoring our health which has financial consequences.
(3) Ignore the importance of compounding

Firstly, many of us are not even aware as to how much corpus we would require to maintain the same standard of life once we retire.

Secondly, most of us do not understand the importance of compounding in our lives.

Thirdly, while we are earning and are still in good health, most of us look to be interested in living off on our future. We buy things on EMIs which is basically the discounting of our future earnings for the current needs, wants, and luxuries. We buy houses that are costly and the sellers of these properties have already priced in any future appreciation. Useless things and materialism keep creeping into our lives.

These reasons make us a most vulnerable lot for our retirement.

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