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.

The Ten Commandments of Cell Phones

  Cell phones have made communication so much more convenient and simple. With the benefits of cell phones there are also some negatives to them.  This article is designed to provide some basic cell phone etiquette as 'Ten Commandments of Cell Phones'.  

By maintaining good cell phone etiquette we will keep more of the benefits of the cell phones while cutting down on their potential negative use. 

1. Thou shalt not subject defenseless bystanders to cell phone conversations. When people cannot escape the banality of your conversation—on a plane, train, bus, cab, or at a restaurant—spare them. We are just not interested, you boorish twit.

2. Thou shalt not set thy ringer to play "La Cucaracha" every time thy phone rings. Or Beethoven's Fifth, or the Bee Gees' "Stayin' Alive," or any other annoying melody. Is it not enough that your phone goes off every other second? In addition, any phone that announces "INCOMING CALL" should be tossed in a toilet.

3. Thou shalt turn thy cell phone off during public performances,in theaters, during speeches and meetings, family dinners, at weddings and funerals and on first dates.

4. Thou shalt not wear more than two wireless devices on thy belt. Techno-jockeys attempting to look like they are carrying Batman utility belts are not cool.

5. Thou shalt not dial while driving. This madness must stop.Put the phone down and just drive. There are enough people in the world who have problems mastering driving a vehicle by itself.

6. Thou shalt not wear thy earpiece in the presence of thy friends and coworkers. This is similar to wearing headphones connected to a CD player—it's just rude.

7. Thou shalt not speak louder on thy cell phone than thou would on any other phone. Phones have sensitive microphones, and it's gotten to the point where you can tell if someone is calling from a mobile phone simply by their volume of speaking, not how it sounds. If your signal cuts out, speaking louder won't help.

8. Thou shalt not grow too attached to thy cell phone. For obvious reasons, an addictive dependency on being constantly "in touch" is not healthy. At work, go nuts. Away from work, give it (and the rest of us) a rest.

9. Thou shalt not display thy cell phone on a restaurant table just in case it may ring. This is not the Old West, and you are not a gunslinger sitting down to a game of five-card stud in a Dodge City saloon. Be a little less conspicuous. If it rings, you'll hear it just as easily if it's in your pocket, purse or "holster."

10. Thou shalt not attempt to impress with thy mobile phone. Not only is using a cell phone no longer impressive (unless, of course, it's one of those really cool new phones with the space-age "Matrix" design, interchangeable 

multi-colored face with a laser-linked heads-up viewer and solar battery charger), but when it is used to impress, said user shall be immediately identified as a jerk.

TEN OF THE BEST LIBRARIES OF THE WORLD

Libraries represent man's most successful attempt in democratizing knowledge. In the modern age, these magnificent institutions have also developed into important social structures that facilitate not just the reading of books, but a meeting point of different people, different ideas, discussion and debate. Libraries, especially the ones featured on this list tend to be the epicenter of activity in neighbourhood in which they are located.

Here is a list of 10 of the best libraries in the world, ones that we wished we could spend whole days in, if only they were closer to us.

#10 The Library of Alexandria, Alexandria, Egypt

The Library of Alexandria was the greatest library in antiquity, and one of the Seven Wonders of the World. The new rebuilt Library of Alexandria hopes to one day match the precedent set by its illustrious predecessor. The Library cost $220 million to build and was completed in 2002. The Library doubles as a cultural center, and contains a planetarium, a manuscript restoration lab, art galleries and exhibition space, museums, a conference center, as well as libraries for children, young adults, and the blind. While the library contains space for over 8 million books, the library growing number of available titles currently stands at around 500,000.

#9 George Peabody Library, Baltimore, Maryland

The George Peabody Library is the research library of Johns Hopkins University. The Library was a part of the Peabody Institute from 1878 until 1967 when it became owned by the city of Baltimore, eventually passing to Johns Hopkins in 1982 where it now holds the University’s special collections. The library is well known for housing the worlds foremost collections of Don Quixote editions, and many of the other titles date back as far as the 19th century. Often described as a “cathedral of books.” - the interior features a 61 foot high atrium, a beautiful black and white marble floor, and many balconies and golden columns. The library is open to browsers.

#8 Jay Walker’s Private Library

Jay Walker is an American inventor and entrepreneur who used his wealth to develop a notable private library. Walker calls his Library “The Walker Library of the History of Human Imagination.” Located in his home in Connecticut, the library contains more than 50,000 books including many early titles and books worthy of making it to the most premier museums in the world. The surreal architecture takes its inspiration from the work of M.C. Escher. Wired Magazine called the library “the most amazing library in the world”. The only reason the library is so low on this list is because it is not open to public. 

7 Abbey Library of Saint Gall, St. Gallen, Switzerland

The picture postcard Abbey Library of Saint Gall is the oldest library in Switzerland and boasts about 160,000 volumes. This is one of the oldest monastery libraries in the world, and holds manuscripts from as far back as the 8th century. The library is also a World Heritage site since 1983. Many of the rare manuscripts that the library holds can be accessed through an online portal, and the public is welcome to use the library, although books dating before 1900 can only be read on site.

#6 New York Public Library, New York, New York

The famous New York Public Library is awe inspiring in its layout, scope and size. It is the the third largest library in North America, has over 50 million items in its collection. It consists of 87 libraries serving 3.5 million people. The Rose Main Reading Room is a treat for the eyes too. The Library special collections include the first Gutenberg Bible to come to America. One of the most recognizable libraries in the world due to its appearances in many Hollywood movies, and even a key setting in the movies “The Day After Tomorrow” and “Ghostbusters”.

#5 Seattle Central Library, Seattle, WA

The breathtaking Seattle Central Library opened in 2004 and features a beautiful glass and steel modern design created by architects Rem Koolhaas and Joshua Prince-Ramus of OMA/LMN. The goal of the design was to make an inviting open and airy space, and breaking the popularly held notion of libraries being dark and stuffy, and thus hopefully inspiring a whole new demographic of previously uninitiated library users. The library can hold up to 1.45 million books and materials, and serves over 2 million patrons a year.

#4 Boston Public Library

Established in 1848, the Boston Public Library was the first publicly funded library in the US. It has since grown to its present collection size of 22 million items, making it the second largest library in the United States. The library's McKim building was built in 1895 and contains many beautiful murals, including Edward Abbey’s most famous that depicts the legend of the Holy Grail. The main room of the McKim building is Bates Hall, known for its grand coffered ceiling. The research collection at McKim is made up of over 1.7 million rarities including many medieval manuscripts, incunabula, early Shakespeare that includes a First Folio, colonial Boston records, a major Daniel Defoe collection, and the libraries of many famous men of history including John Adams, William Lloyd Garrison, and Nathaniel Bowditch.

#3 Reading Room at the British Museum, London, England

The Reading Room at the British Museum is found in the center of the Great Court of the British Museum. It features a domed roof, with the ceiling made of a variety of papier-mâché. For much of the Room’s history, access was only granted to registered researches, and during this period many notable figures studied at the Library, including Karl Marx, Oscar Wilde, Mahatma Gandhi, Rudyard Kipling, George Orwell, Mark Twain, Lenin, and H.G. Wells. The Library’s collection was moved to the new British Library in 2000 and the Reading Room now houses an information center and a curated collection of books relating to history, art, travel and other subjects relevant to the collection’s of the British Museum.

#2 Bodleian Library, Oxford, UK

The Bodleian Library is the library of the University of Oxford. Established in 1602 it is one of the oldest libraries in Europe. The Library has over 11 million items, and many items of historical import, including four copies of the Magna Carta, a Gutenberg Bible, and Shakespeare’s First Folio (from 1623.) The Library consists of multiple buildings, perhaps the most visually interesting of which is Radcliffe Camera. It’s the earliest circular library in England, and has appeared in multiple films, including “Young Sherlock Holmes”, “The Saint”, “The Red Violin”, and “The Golden Compass”.

#1 Library of Congress, Washington D.C.

The Library of Congress is effectively the national library of the United States and the oldest federal cultural institution in the US. The library consists of three different buildings and is the largest library in the world. The library is open to the public, but only members of congress and other important government officials may check out books. The library also serves an important function as the “library of last resort” in the US, ensuring the availability of certain items to various libraries around the United States. The holdings of the library are extremely impressive, they include - over 32 million books, more than 61 million manuscripts, a rough draft of the Declaration of Independence, a perfect vellum copy of the Gutenberg Bible (one of only four in the world), over 1 million newspapers from the last three centuries, over 5 million maps, 6 million pieces of sheet music, and more than 14 millions photos and prints.