Did You Plan Your Retirement? Know Why, When & How to Plan Your Retirement

I know for a fact, 20 years back our grandparents never planned or even thought of retirement. Back then life was quite simple and you do not had to worry about things like inflation, uncertain economy and more importantly break down of joint family system.
But today, a working professional who lives in urban India had to think about retirement when he is in mid or late 30’s. Especially, in a metro cities like Mumbai & Delhi where cost of living is so high, you cannot afford to overlook your retirement plan.
You must take your retirement plan very seriously or else you would have a hard time living in a metropolitan city once you grow old.
 
This particular blog post emphasizes on the need of a retirement plan. We discuss why it is essential to have a plan in first place, then when you should start planning, followed by a calculator that will calculate your expenses when you retire and finally helping you to choose a right retirement plan.

Why You Need a Retirement Plan

This paragraph explains how it is important to have a retirement plan in first place. I would present you with genuine reasons why you cannot afford not having a retirement plan.

1. Privatization of Indian Economy

Government and other economist think that if a country has to progress then its economy has to be privatized. It means more companies should be owned by private sector rather public.
And we know that private companies do not have any pension plan unlike public sector companies.
Therefore, in light of this reality, there would be no pension scheme in a private company after your retirement. Hence there is a great need to have your own retirement plan in place.

2. Increase in Life Expectancy Ratio

In year 1970, the average life expectancy ratio of an average Indian was some 50 years. However, in 2013 it is well over 65 years and it is expected to rise up to 75 years in 2040.
Hence, you are going to live more and you cannot survive without a retirement plan.

3. Increase in Dependency Ratio

Dependency ratio is nothing but ratio of old population to young population. Right now we are young population however in next 40 years the number of old people would grow substantially because of several reasons.
Hence, if dependency ratio is 6% now then in 2050 it would be some 15% to 20%. Therefore, a lot of older people would need a retirement plan.

4. Decline of Joint Family

In recent years, the bad thing that has happened to India is decline of joint family. Earlier if you were old and do not had a retirement plan then you had a joint family which could have taken care of you.
However, now in urban India we see rise of nuclear family hence older people have to take care of themselves hence a retirement plan is must.

When to Start Planning Your Retirement

This is very important to know the right age at which you could start planning your retirement. The golden rule of a retirement plan is that it is never too soon planning your retirement. In other words, the early you plan your retirement the better it is.
Right time for your retirement plan is divided into three time period in your life cycle. They are

Mid 30’s

First one is mid 30’s. Well it is too early and usually people do not plan retirement at mid 30’s but you have to if your income is too little.
You know that you cannot afford to buy a home and in future you would not have enough money to live a decent life once you retire.
Then you need to plan as early as possible. People with uncertain job, who live on daily wages, must start planning as early as possible.

Mid 40’s

Normally, a working man or woman starts his or her retirement planning at the age of 45 years. Mid 40’s is the age where most of the people start planning their retirement.
If you are working and still paying for your home or mortgage then mid 40’s is the right time period to start planning your retirement. You need to consider various expenses that you are incurring now when you start planning your retirement.

Late 50’s

You can only afford to plan your retirement in mid or late 50’s when you are financially very sound. It means you have enough money in your bank account that you don’t have to worry about paying for home because you own it and you really do not have any major expenses.
Only then you could afford to plan your retirement so late in your life.
You must figure out the category in which you fit in and start planning your retirement.

A Calculator for Cost of Living in Your Retirement

Let us see what would be the cost of living once you retire. Your retirement year would depend upon your age right now.
I would consider two scenarios.
a) First one is after retirement you want to live a modest life - Simple life, expenditures would your daily groceries.
b) Second is you would like to spend a lot on various things – A life where you would love to travel, expenses like marriages etc.
Scenario a)
Different variables that you have to take in account are

• Your current age
• The age you want to retire
• Inflationary expenses like your groceries
• Non-Inflationary expense like you EMIs
• Annual Inflation rate

And then calculate. I could give you a calculator link where you could fill in various variables according to your age and year of retirement and check out the expenses.
Link is http://www.moneycontrol.com/personal-finance/tools/retirement-planning-calculator.html
Similarly you can calculate for
Scenario b)
The result would depend upon the money that you would like to spend every month.

How to Choose a Best Retirement Plan

There are many life insurance companies which offer retirement plans for you. You need to talk to their customer support or an insurance agent before you choose a right plan.
However, there are some common factors before you choose a plan from any of these companies. Such factors are

Vesting Age

Age at which you choose to start receiving your pension.

Annuity

Your regular monthly pension that is payable to you once you cross the vesting age.

Sum Assured

The amount that a nominee is going to receive if there is a death during the accumulation period.

Accumulation Period

Period when you pay premiums to accumulate funds for retirement.

Surrender Charges

Charges that are levied by the insurer if you end the policy before the date of vesting.

Participating Plans

Plans that give a share of insurer’s profit to the policy holders. The share is not fixed and totally depends upon financial performance of the company.

Ulips for Old Age

Ulips are unit linked insurance plans.

Charges Levied

You need to consider charges levied by various companies.
You have to keep in mind all these factors before you choose a retirement plan from a company.
Some of the companies are LIC, MetLife, ICICI etc, they all have some great plans.

How Serious Urban India is About Retirement Plan

As a matter of fact urban India takes retirement plan very seriously.
About 90% of them want to save enough money for their retirement. Some 5% of them are not sure and only 2% to 3% would be asking help from their children.
Hence, it is very clear that majority of urban Indians would like to plan for their retirement ahead.
No more they are looking up to their children as they want to be independent.
Therefore, this blog sheds some light on the importance of having a right retirement plan. The sooner you plan about your retirement the better it is.
Never, depend upon on your children, after retirement you should live with dignity. Hence, start planning for your retirement from now on.

How Crowdfunding Sites Can Help You to Raise Money for Your Dream Project

Earlier it was very difficult to raise funds for a project that you considered as your life-long dream. If you are a person with a great talent living in some remote part of India then you might find it very difficult to get someone who is willing to sponsor or patronize you.
Your dreams are dashed just because there is no one that can facilitate your idea to make it a real success. Therefore a common man with dreams has nowhere to go. However, now things have changed dramatically.
A talented person with very little or no resource could rally a huge crowd around the cause that he or she wants to promote. Today, with the help of crowdfunding you could get enough funding for the project you had liked to do. All funding comes through internet.

For example, if you’re a film maker and wants to make a documentary about the life of people living in slums and you don’t have money to make that film then you could raise enough money through crowdfunding.

What You Need to Know about Crowdfunding

I am not going to complicate things for you. I will explain crowdfunding in simple terms so that every one of you could understand it.
If you are an individual or an organization with a cause and you need funding in order to promote that cause but you do not have resources (which is primarily money) then you could use various crowdfunding platforms (various websites) to garner support from individuals or public around the world.
In other words, you could have a project or your cause placed on crowdfunding websites asking for donations and individuals from around the world could chip-in to raise the money.
If you have a project that might cost Rs 500,000/- then you could raise this amount asking for charity on a crowdfunding websites.
So there are three groups or party involved.
1. Crowdfunding Websites – Platforms that hosts various projects created by individuals or organizations that are in need of money. The important thing to know about these crowdfunding websites is that they do take 5% to 10% as commission on the money raised.
2. Organization that wants to raise money for a cause or a project – People who are in need of money to complete their project set a desired amount of money which needs to be raised. It can be Rs 100,000 to Rs 1000,000 depending upon the project.
3. People From around the world which are going to donate money – People like you, who donate money if you are interested in a cause. There is a minimum and maximum amount for the donations set by the website. Minimum could be Rs 100 and maximum Rs 500, it depends on site to site.

Kinds of Project that are Suitable for Crowdfunding

A dream project of yours that begs funding must be of certain kind. Here in India, you cannot expect to raise money for every kind of projects.
You need to know different types of projects that could be easy for raising desired amount of money.
In India, crowdfunding could be the best way to raise money for following projects
1. Short Films and Documentaries – If you want to make short films and documentaries to raise awareness then you could crowdfund your project.
You could easily raise money up to Rs 1000,000.
2. Music Videos – If you have passion for music that is different than mainstream music then you could use crowdfund platforms to raise funds.
3. Non-Profit Projects, NGO’s – Crowdfunding is the best when it comes for charity. If you want to raise money for the education of kids living in slums or helping women then crowdfunding is the way forward. People would love to donate money.
4. Books & Publishing – If you want to write and publish books and others related stuffs then use crowdfunding to make your dream come true.
5. Start-up Companies – Finally, crowdfunding would help in generating money for start-up companies. If you have an idea but have no money to start it then crowdfunding is the future.
In conclusion, I would say creative projects like film, music, arts etc are the best for raising money through crowdfunding.

How do you Get People to Fund Your Dream Project

If you want funding for your dream project then you have to create a project on a crowdfunding website.
Here, I will give you an example of most popular website in the world to raise money through crowdfunding. And that is www.kickstarter.com an American website.
You could go there and click on start a project. You have to give every possible details of the project that you want to create.
It must show things like photos, videos and sketches. You could also create demo for explaining your project to audience.
Then you have to give an amount that you would like to raise. In Indian websites (mentioned below) or any website you have to set an amount and the timeline with a date.
You need to go to the website and read every detail before you kick start a project.
Moreover, you cannot just create a project and sit idly expecting that people would start donating money and you will raise the desired amount.
You have to reach out to the people who are ready to donate for your cause. You have to use social media especially twitter for spreading a word about your project.
You need to create pitch videos and do things even offline like giving cards, distributing pamphlets, organizing seminars etc.
Just putting a video would not do, it takes more than that.

Some of the Best Crowd-funding Websites in India and USA

Now I would like to tell you some of the Indian crowdfunding websites that are famous and gaining popularity.
1. Catapooolt – This is the best crowdfunding website present in India. If you have a project then you could use this platform to raise money.
2. Ketto – This is another crowdfunding website which is still in its infancy. You could visit the website and find out more.
3. Wishberry – Like above two websites this is also present for a while now.
You are required to go to these sites and find out more.
Some of the websites that are expected to come are Fund A Peer, Pik A Venture, the Hot Start. These are coming soon.
Now let us see some websites in USA. In reality, they dominate the crowdfunding market.
1. Kickstarter.com – This is the number one website in the world and a real trend setter. All other follow this website. It has helped in raising over $900 million for various projects.
2. Indiegogo – Like Kickstarter it is also a great platform to crowdfund your project. If you want funding for your project then you have to visit these websites.

Your Responsibility towards Your Backers

Backer is nothing but donors who will be funding your project.
You have a responsibility towards your donors because you cannot ignore them. If you do then you are not going to get funding for your future projects.
You could reward your donors with tax exemption receipts. Moreover, you could do things like
1. Loyalty points for your donors.
2. Gifts and other accessories from your project
3. Discount vouchers from lifestyle brands
4. Off Tax Benefits
You need to do this if you want to retain your donors.

Future of Crowdfunding in India

What is the future of crowdfunding in India. Well, according to me it is really great, the market is expanding rapidly.
However, the best thing about India is you could get a project started because there will always be your family and friends to donate money.
It is because of our family culture. Hence, you would see many such websites starting in India.
I will conclude by saying if you have a genuine project or an idea then you could make it happen through crowdfunding. It is because you do not have to worry about funding.
But as a caution, I must tell you just creating a project on a website is not enough as you need to promote and take it to the people.