Planning your retirement

Retirement is not something that just happens to other people – all of us will experience it at some point in time. However, not all of us can confidently say that we are well prepared for it. And, unless you work for the government, as a private sector employee you will have to support yourself during retirement because the government will not help you.

There is a high possibility that many of us might be under-funded to finance our own retirements. Even if you are young and retirement could be 30 years away for you, now is the best time to start thinking about your retirement.I hope that this article is very useful for those who are above 40 years.

What does retirement mean?

At a most basic level, retirement means that you will no longer be actively working or earning any salary income. As a result, you need to live off the savings that you would have made during the peak of your income earning years. During the peak of your economic life, you accumulate assets through your savings. During your retired years, you decumulate this pool of capital.

With improvements in the medical sciences, our generation is expected to live longer. If we assume that the average person retires around 55 - 60 years of age, they could still have another 20 – 25 years to live. This means that their savings have to last them for approximately 2 decades or more, when they do not have the capacity to work or are unemployable.

When is the best time to start planning for retirement?

Start early is the mantra that all financial advisors chant when it comes to retirement planning. The reason for this is that one ought to use one’s earning capacity today to accumulate savings that we can then consume during our retired years. If we don’t start early, funding one’s life for 20 – 25 years during one’s retired years can be very challenging. Our earnings capacity will deplete as we age. So, it’s best to take advantage of our earnings capacity today to protect our future when we are not actively earning.

Additionally, recognize that around the time that you plan to retire might also be the time that you have other additional needs to fund major goals such as paying for your child’s education abroad, or their marriage or taking care of your parents’ healthcare needs. So, be prepared to have enough capital to be able to simultaneously finance these different goals.

How can inflation ruin my retirement?

Inflation is like a silent tax that all of us pay. Rising prices raise the cost of living and over time reduce our standard living if our incomes do not rise commensurately. During retirement, as we have no salary income, all our passive sources of income such as retiral funds, investment or rental income, must earn us a higher rate of return than the long term rate of inflation.

Over a 20-year period during one’s retirement, the cost of living can easily double as a result of inflation. So, whenever we plan retirement, one must keep in mind having investments that can help offset the negative impact of inflation on one’s retirement savings.

What instruments should I invest in towards my retirement?

If you are young, the best instruments to invest in towards your retirement are one’s where you can expect long-term capital appreciation that will help offset the risk of inflation. You can afford to take more risk with your investments, because retirement is a long while away. If you are middle-aged and closer to retirement, you might want to reduce your exposure to risk and be invested in instruments that can earn you a more secure return because retirement is just around the corner.

The following are some instruments that are relevant for retirement planning:

- Retiral accounts at work – PF and EPF

- Equities – either through direct stock holdings or through mutual funds

- Pension plans – either pure pension plans or insurance cum pension plans

- Annuities – through which you invest today so that you can get a recurring payback after you enter retirement till the time of your death

- Investment property – that can earn you rent during your retired years

How should I think about healthcare needs during retirement?

Just like an aging car increasingly needs constant servicing and attention to protect against regular wear and tear, we will also need constant attention towards our health as we age. Look around, and you will see aging relatives who are getting health procedures done such as heart operations, joint replacements, removal of organs and so on. These are natural side effects of aging. However, the cost of healthcare is rising at a double-digit percentage, and chances are that by the time we enter retirement, common medical procedures might cost double of what they do today.

One must be prepared with enough funds to take care of one’s health during retirement. Additionally, one must ensure that one has a basic amount of health insurance coverage on an ongoing basis. Getting health insurance gets more expensive and tougher as one ages, especially after the age of 65.

How much money do I need to retire?

This is a very personal question and relates to the kind of lifestyle that you want to lead during your retired years. At a minimum, most people need 60% - 100% of their pre-retirement income each year to finance their retirement. For example, if at retirement you are spending say Rs 50,000 per month (or Rs 6 lakhs per year) towards your lifestyle, then you would need anywhere between Rs 30,000 to Rs 50,000 per month (60% - 100% of your pre-retirement income) during your retirement.

So, in the above example, assuming you retire at between age 55 – 60 years, you will need a lump sum that can create Rs 30,000 to Rs 50,000 of monthly income, keeping in mind that inflation will push this number higher every year, for the next 20 years or up to the time that you live. You must ensure that you do not outlive your savings, otherwise you will not have money to support your lifestyle and might have to rely on others to support your daily lifestyle.

If you want to retire early, say in your 40s, then recognize that you will need to ensure that your retirement savings last you that much longer as you are expected to live till 80.

Three point action plan to prepare for your retirement

1. Estimate your lifestyle costs: Ask yourself what kind of a lifestyle are you interested in during your retirement and how much you will need to support that keeping in mind that inflation will increase the cost of lifestyle between now and your retirement. Recognize that if you want to maintain something close to this, you will need adequate funds support this for at least 20 – 25 years during retirement.

2. Start saving now: Starting early is the best activity for your retirement planning because it allows you to benefit from compounding of capital. Even if you can put away small amounts of money, every little bit helps. As a matter of discipline, set aside 10% of your income towards your retirement if you are young, and up to 40% if you are middle-aged. You need to create a pool of capital that can get you a lump sum when you start your retirement that will constantly create income during your retired years.

3. Create passive sources of income: In retirement your earning capacity through active work goes down. So use your earnings today to create passive sources of income that can help you meet your income needs during retirement. For example, you can invest in property that can earn you rental income. Or, you can buy investment instruments that can give you dividends or interest income over time.

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If you fail to plan, then you are planning for failure.

So,better to plan for your retirement as given above and enjoy the last part

of your life happily and peacefully.

Good Leadership Qualities

Everyone wants to lead, but at what cost? A careless approach to leadership can result in major losses for everyone.

Most of us can recall a leader who just wasn't cut out for the job. Being a leader is demanding; becoming a great leader is uncommon. Followers aren't particularly merciful to those who lead incompetently. Instead, they can respond with insubordination, decreased productivity, or a generalized attitude of confusion or frustration.

If you are a business leader or thinking about becoming one, here are some mistakes to avoid:

 

1. Don't lord it over your staff. 

No one likes a know-it-all. Assuming a cocky stance or a bullying attitude will strike a similar flint in the hearts of your subordinates.

 

2. Don't be very soft. 

Just as a sharp edge can have a cutting effect, a marshmallow can quickly lose its shape. Being a people pleaser means that you will inevitably let someone down, so don't even try. Instead, focus on the job and make it work with everyone's interests as best you can without bending over backwards until you break.

 

3. Don't put on a over-confident front. 

If you need information, ask for it rather than pretend you have all the answers. There's nothing wrong with an honest question, but there's plenty wrong with someone who is afraid to ask.

 

4. Don't misjudge employees' abilities. 

Take time to read files, interview people, and observe performance before making staffing decisions. Put competent, trustworthy people in charge of important projects so that neither you nor the company will regret it.

 

5. Don't play favorites. 

Owing a favor or liking a person are two poor reasons for handing out raises and promotions. Feeling sorry for someone is just as bad. Use good judgment and fair play to make staff decisions.

 

6. Don't hold a grudge. 

If you don't get along with someone, stay away from the person; don't try to get even. Leaders who use their position of authority to take punitive action based on personal vendettas are likely to find themselves in trouble.

 

7. Don't take a casual approach to the budget. 

Get to know it thoroughly. Understand company growth patterns and long-term projections, as well as how your leadership can play a role. Being careless with money is dangerous and potentially costly in the business world. Careless mistakes take time to fix, and in business, time is money.

 

8. Don't overlook company shifts, goals, or problems. 

Study the "big picture" with a view to finding your place in it and growing with the company.

 

9. Keep an eye on industry trends. 

Know what's "hot" and what's not; that's how leaders keep leading. Otherwise, someone who is more knowledgeable than you may take your place.

 

10. Stay human. 

When mistakes happen, forgive others and yourself. Laugh and be friendly, but don't look foolish doing it. Avoid mechanical responses and a 24/7 mentality toward your job. Do your best, but then leave the rest of your job at work until the next day. It'll be there when you return. At night and on weekends, enjoy your family and have fun. You've earned it.

 

Becoming a leader is challenging. Follow these suggestions to avoid problems and help your company and your career reach their potential. 

Time Management Skills

Time management is the act or process of exercising conscious control over the amount of time spent on specific activities, especially to increase efficiency or productivity. Time management will make us more efficient in everything we do

Below is a list of some time management (self management) techniques and tips . They are in no particular order.

• Keep a calendar/diary. Mark all your important dates/tasks.

• Keep a list of “Things to Do” and mark them off as completed.

• Every day make a list of what you have to do tomorrow.

• When possible do the unpleasant tasks first.

• Figure out when (what time of the day?) you work most efficiently.

• Establish your priorities for what you want to get done. Identify the tasks and activities that are the highest priority and eliminate those of low priority.

 

• Allow more time than you think you will need. This makes your schedule flexible and allows for the unexpected.

• Get into the habit of using your odd five minutes here and there more productively. Don’t just dismiss it as only five minutes – they add up throughout the week!

• Accomplish one or two important tasks rather than lots unimportant ones.

• Tidiness makes your life easier and reduces stress.

• Allow time to relax, recharge and do nothing.

• Leave time in your schedule for un-planned activities.

• Know your strengths, skills and weakness.

• Ask yourself, “What am I doing that someone else could do for me?” Delegate!

• Don’t be scared to ask for help

• Bin things straight away to reduce the clutter (junk mail, newspapers and spam email etc).

• Divide large overwhelming tasks into smaller chunks, and attack them one at a time.

• Complete at least one task each day that you don’t like to do, but know you should.

• Watch less T.V. If you watch T.V for three hours a day from the age of five years old, by the time you are fifty five the amount of T.V you will have watched will be the equivalent to watching non-stop 24 hours a day for six years and three months. If you cut this down by just one hour a day, so then only watch two hours of T.V, you will have gained back over two years worth of time.

• Realize that all your email checking, surfing the internet and other procrastinations add up to hours of lost time each week (sometime even each day!) 

Don't let the pain of one season destroy the joy of all the rest.

Don't judge life by one difficult season.

Persevere through the difficult patches

and better times are sure to come some time or later.

"Life is not about waiting for the storms to pass...it's about learning how to dance in the rain."

How to speak well and confidently

Are you very shy when it comes to new surroundings, such as starting a new class or moving to a new area? Sometimes, it is necessary to overcome your shyness and speak confidently. By doing this, it can help you not only to share your ideas properly to others, but also to learn communicating with others. Here are a few steps to consider when speaking with confidence.

Steps

1. Learn how to have conversations with people. Your ideas or opinions may not always be accepted by others, but this is nothing unusual. Open your mouth, express your beliefs! This will improve your courage.
2. Don’t be afraid and speak loudly. If you speak in a low voice, not only will others not be able to hear what you say, but you will also portray a submissive demeanor, which suggests the opposite of a confident one.
3. Make eye contact when you speak. For one thing, it is polite for others. Also, eye contact will help others to listen to your thinking carefully.
4. Praise yourself everyday! This will promote your own confidence, which is important when you speak. With more confidence, people will take your thinking more seriously.

Tips

• Don’t be nervous when you make mistakes. Human error is far from being a new concept — nobody is perfect! It is normal for everyone to make mistakes. Just calm down and keep speaking bravely.
• Try and try again! This may be difficult for a shy person at first, but you need to force yourself to speak, and not seclude your thoughts. If you have some ideas, then try to speak out! Don’t just keep them in your head.
• If you have self confidence issues, try to think that you are the only one who has sound knowledge about the topic. Then go ahead and impart your knowledge to the audience in an effective way.
• Remember that there is a fine line between confidence and arrogance. Don’t portray an exaggerated amount of confidence, or you will come off as arrogant, believing that your ideas are better than the ideas of everyone else.

How to Convince People Effectively

The ability make others believe what you believe is important for success in many fields. There is often a fine line between convincing somebody your views are valid and annoying them. In this article we'll look at some of the techniques you can use if you want to convince another individual to believe what you believe.

Steps

* Do the homework. Make sure you understand your own viewpoint. If you are going to try to convince somebody that the Eiffel Tower is taller than the Statue of Liberty, find out the facts first, don't make assumptions.

* Learn the field. For certain areas you will need to know more than just the facts, as some subjects are subjective. For example, if you wanted to convince somebody that the Statue of Liberty was prettier than the Eiffel Tower you will need to know enough about architecture and aesthetics to argue about that subject, as well as the facts, like how tall they are. If you are selling something, like a car, you will need to know all there is to know about the car you are selling. Likewise, you will need to know all about the other cars that are in competition with your vehicle.

* Engage the person politely. Maintain eye contact where possible, but don't be annoying about it.

* Establish mutual respect. You will never convince anybody of anything if they believe you do not respect them, so show the person you respect them and be good enough to gain their respect.

* Gain trust. To convince people of most things you will need their trust. They don't have to trust you as a person, but they do need to trust that what you are saying makes sense, that you know your "stuff". The best way to do this is to do your homework and fieldwork, that way you know a lot about the subject.

* Listen carefully to what your debate partner has to say. Respond thoughtfully to their point of view.

* When you can, back up what you say with real facts. Lying will only convince somebody until they find out about the lie, then you will never be able to convince them of anything again.

* Be willing to be convinced. Sometimes accepting one point from the other person and showing that you can change your mind when you are wrong will help them to be the same, and change their mind about the subject you care about.

* Practice active listening. Active listening helps you control a conversation and keeps it on track. Active listening techniques include:

· Non-verbal feedback. Nodding your head as the other talks etc.

Paraphrase what the other person has said to make sure you understand it.

* Make sure you understand the other person's objections and respond to them in an intelligent manner.

* Keep vigilant about your belief, but always respectful of the beliefs of others. Explain why your belief is important to you.

* Understand the other person's motivations. If you know what another person wants, you are more likely to be able to give it to them.

* Rephrase your beliefs in a way that the other person is better able to understand.

* Follow up. Ask questions to make sure the other person understands their new views completely.

Tips

· To hold the eye of a crowd select individuals in the crowd and hold their eyes on-and-off through your presentation.

· Never lose your cool. Nothing lacks conviction more than a raving idiot.

· Always be friendly and respectful even if the other person does not change their mind.

· Beliefs fade. You may think you have changed somebodies mind but find that in a day or two, perhaps a week, they are right back to where they were before.

· Buy and read some books on sales techniques.