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SAVING? YES! FOR RETIREMENT? NO!

Saving is a part of normal economic well being, and there is no reason why it should be linked with or restricted to the post-retirement life. There are many better and less painful reasons to save, and the most important and welcome reason is investment, which is the basis of any organized business activity. In fact, the returns usually diminish with the increasing lack of flexibility of investments.

It is not that there is no rationale in planning for the retired life, but sacrificing your whole life for the sake of being able to take care of highly unpredictable and expensive health care at the fag end of your life just prior to your death would also be unhealthy and abnormal.

RATIONALE FOR RETIREMENT SAVING

When we talk about saving for retirement, we are primarily talking about the period when we would not be fit enough to be of any productive endeavor. This itself is a very dangerous thinking pattern, because if there is a time, when we must be active, it is the post-retirement phase only. If we begin with the intention of becoming inactive after a particular age, we are actually saying goodbye to healthy aging. If you are wanting to raise the argument that one can be more active and healthy in old age without the anxiety of earning, let me say that you are mistaken. Economic incentives are one of the strongest motivation for action for human beings, irrespective of age, and by retiring this incentive, one actually retires the active and healthy life as well.

What we do need in the later years of our life is additional income from our past investments, but it is not very wise to sacrifice the best periods of your life for the sake of those years alone. Hence the appropriate approach would be to include productive investments as part of our economic decision making. Let me emphasis that it would again be better not to link them with the ultra-safe approach of saving the earnings for thirty years later. Instead the approach should be to make the investment decisions on the basis of maximum returns, while entertaining calculated risks. Such an approach is likely to maximize your life time earnings, and utility far more than committed savings with the intention of serving your post-retirement medical bills alone.

FINANCIAL PLANNING IS THE ANSWER TO POST RETIREMENT NEEDS

In my opinion, retirement will be best served by appropriate financial planning. For example, plan purchasing real estate that you can

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