There is a lot of news about this man you can google and find out more but it goes without saying that this kind of ‘retirement solution’ is not for the salaried people among us. Retirement is a scary thing. By the time salaried people reach that age, they have typically been working for about 40 years. For most of them, their existence is largely defined by the routine of their jobs. More importantly, their finances are defined by receiving that salary every month.
Except for a small fraction of those who are fortunate enough to have inflation-protected income – for example, rent or government pensions, or who have amassed a lot of money during their working years – post-retirement ghosts financial problems And poverty plagues most retirees. Nowadays, lifespan is longer and most people have two or three decades of life left at the time of retirement. A lot can happen during these long years. For example, even though lifespans have become longer, the rise of chronic diseases means that ‘health’ is diminished and many of us will face devastating medical bills at some point in the latter part of our lives.
This fear of the unknown—the ghost of the risk that comes with retirement—makes it a natural tendency to be conservative with post-retirement investments. This is completely understandable. Once you stop earning, there is no Plan B. If you make a big loss in your investment, that money is gone forever. You will not be able to earn more and make up for the loss. This makes people extremely conservative in their approach. A large number will rely only on bank deposits, government schemes and perhaps.
It sounds safe but in reality it is not. The problem is that your savings could face a sudden, difficult disaster, or they could face a protracted, gradual disaster. Like the proverbial frog in boiling water, the latter cannot be felt. Those who face this long, slow disaster may not even know there was an alternative.
In fact, I’ve realized that some people choose this disaster intentionally. Why so? I’ve spent years explaining that after retirement, equity is the key to surviving this slow disaster. There are people who understand this very well and yet are so afraid of a quick disaster that they voluntarily choose it. It’s the worst of all worlds, and it comes from a complete lack of confidence. This confidence is hard to gain, and the only way to do it is through knowledge and experience, coupled with real-life examples. That’s part of what I try to play out in this publication, with resources you can find online, including a very comprehensive set on Value Research Online. However, I should point out that like all savings, your post-retirement Investment Planning is something that needs to be done sooner rather than later. It may be a slow disaster, but the years roll by fast and the slow ones don’t take long to come.
(The writer is CEO, Value Research)