It is primary to understand the meaning of retirement before planning because planning depends upon understanding the meaning.
On searching retirement on google, you would get millions of search results spread over hundreds of pages. The first result would be the meaning of retirement. The literal meaning of retirement is ‘the action or fact of leaving one’s job and ceasing to work, the period of one’s life after retiring from work and a secluded or private place.’ After the literal meaning of retirement, most of the pages would be full of the results about retirement planning which includes when to retire, how much money is enough to retire, pension plans, and a whole lot of suggestions about retirement planning. It indicates that financial planning and amassing retirement fund is considered as the most important part of retirement planning.
Retirement is much more than financial security and a good pension. Retirement has different meanings for different people. It is more important to understand the meaning of retirement. Many people wanted to become a serious entrepreneur, writer, consultant, blogger, activist, etc post-retirement. Those who want to change their profession on the name of retirement only desire to get rid of the bosses, targets and compulsions. In my opinion, they require a sabbatical, not retirement. During the sabbatical, they can work out their plan, gather and learn required skills, train themselves, and rethink the plan, if required.
Many people wanted to retire for exploring new places, redecorate the home, perform social service, stay with grandchildren and do what they haven’t done. In my opinion, the people in this category are serious ‘would be retirees’ because they do not have the intention to work seriously for earning. Serious retirees require much solid and less risky financial planning.
Now comes the decision making part. When you have decided to retire and at what age you wanted to retire? If you have decided at the age of 35 to get retire after 20 years than you have ample time to streamline your finances according to your retirement goals. But if you have decided to retire after 5 years at the age of 50 than you may have to look into your retirement goal differently. Early starter always has an advantage because of the larger time frame and those who would decide latter have to bear some difficulties in terms of financial planning. But, again it depends upon the financial status of the late decider and their retirement goals. Whenever you decide to retire, plan it meticulously.
Some words on those who would never retire?
Any kind of financial planning can be done by only those persons who earn at least a little more than the minimum expenditure. This surplus amount can be saved/invested to earn a return. It means those who are not able to earn enough or earning just enough to fulfill their daily needs may never be able to have financial freedom and they may never retire. They require to struggle for their basic needs until death.
In some developed countries, social security is well established which lessens the pain of post-retirement life. But in a country like India where the government only considers a citizen poor, if he spends less than Indian rupees (INR) 47 per day in rural areas and INR 32 per day in the rural areas i.e. approximately less than 60 Cents and 40 cents per day respectively. About 70% of the population cannot think about retirement because of the inadequate level of income during their earning days. Moreover, the compensation granted on the name of social security to the old age people is equal to nil. Even in the United States where social security is comparatively better, nearly 46 million people are still living in poverty and most of them would be dependent on state support in post-retirement old age.
In the case of poor retirees, the government is their financial planner and it plans pathetically. Bad planning by the government due to less understanding of retiree’s life and their problems, poor retirees have to lead a miserable life during their last leg of life. Old age pension or financial support after retirement in most of the countries around the world is very low. No one can live respectably on these pensions until he has some earning from other sources.