With heightened expectations beyond the imagination of middle classes of yore, everyone wants a good life; not just now, but also in the post retirement future, without the safety net that en extended or joint family used to provide.
We want the nuclear families and at the same time, post retirement safety nets. A case of eating our cake and having it too.
And how do we go about creating that post retirement prosp3erity when our present requirements are so large that more often than not, a good number of Yuppies are living on next month's salary; thanks to easy availability of a multitude of credit cards?
Every newspaper worth its ink has financial consultants to advise its readers on how to go about saving money in the many avenues currently available; banks are fighting hard to retain their fixed deposits clientele by driving their interest rates higher. But this is an illusion.
One private bank boasted that it would offer, suppose, 9.5% for 365 days, but one percent more for 366 days. When asked, the clerk, or rather the executive nonchalantly revealed that the extra one percent would only be applicable to that one extra day that the money would remain in the bank, not the full 366 days!! Had the specific clarification not be sought, how many would have been duped?
That aside, there are many avenues for saving money these days; perhaps as many as there are for wild spending. Advertisements for the good things of life find stiff competition from advertisements for SIP, systematic investment plans which are one large step ahead of old fashioned recurring deposits, various types of deposits, mutual funds, online trading, or through the traders, short selling, daily selling, futures trading, etc; the more financially adventurous you are, the more the avenues and more attractive the returns while the market is raging.
And in addition to these, are the claims of health insurance companies, life insurance ones, those promising to eventually fund your own home, car, your offspring's' marriages and their higher or foreign educations, as the case may be, [post retirement foreign holidays and so on and so forth.
Cruising through the advice offered by various financial consultants in the papers, the bottom line that emerges is that one has to put away massive amounts of money every month to pay for you and your children's futures. After that, I suppose, the children would have to put away even larger sums of money to fund their old age and their children's futures.
Now, when one is putting away such large sums of money, what is left to live for the present of each generation? Virtual pauperism?
A recent estimate has it that if one has 15 years left to retirement and expects a post retirement annual expense of Rs 5 lakhs, one has to put away Rs.22,173 every month. (Express money, April 9, 2007).
Let us analyze this. Once upon a time we used to be happy to save anything above 10% of our monthly income. Now the threshold is supposed to be much beyond 30%.
At that rate, to be able to save over Rs. 22,000/-, every month, one should have an income of at least 75 to 80,000/- to be able to pay installments for the new house, the fancy car, the children's education in a high end school, their good life and yours.
If you earn less than that, you will be impoverishing and depriving your kids of a glorious childhood in order to hopefully pay for education abroad. Will India still not be able to offer significantly better education even then?
Education is not all. What about the constant stream of technological goodies, the holiday specials which one cannot do without these days, if one is in that income bracket. And if not, then there is no question of saving 22,000 every month!
Finally, how far will those five lakhs per annum go, fifteen years down the line? Five lakhs means about 40,000 odd per month. In today's' times, it may sound neat, but fifteen years hence, with inflation eating into everything, how far will that forty thousand go?
Will it make today's pauperism worthwhile, when a similar pauperism awaits the following generations?