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The elderly people are likely to be exposed to emotional, physical and financial insecurity in the years to come with the rapid changes in the social scenario and the emerging prevalence of nuclear family set-ups in India in recent years There is an emerging need to pay greater attention to promote holistic planning including pension Planning, health care planning, fiscal discipline, savings levels etc. in the context of changing family relationships and severely lim¬ited old-age income support. This presentation offers insights into the marketplace for retirement financial advice, What are the challenges faced by retirees, what financial advisers can do, how they can impact client’s life, and how clients can be steered toward good retired life. We are now witnessing an acknowledgement among those in their 30s and 40s that working in retirement is, and may have to be, part of their formal retirement plans. Retirement planning no longer consists of simply putting money aside each month.
Citation preview
The Golden Opportunity of Golden Years
by
Neeraj Chauhan, CFPcm
13/07/2014 Neeraj Chauhan, CFP
By providing financial protection against the major 19th century risk of dying too soon, life insurance industry became the biggest financial industry of the century
Now
Providing financial protection against the new risk of not dying too soon enough may well become the next century’s major and most profitable financial industry
Peter Drucker
13/07/2014 Neeraj Chauhan, CFP
Most Populous countries 2013
Country Population (in Millions)
China 1,357
India 1,277
United States 316
Indonesia 249
Brazil 196
Pakistan 191
Nigeria 174
Bangladesh 157
Russia 143
Neeraj Chauhan, CFP 13/07/2014
Most Populous countries 2050
Country Population (in Millions)
India 1,652
China 1,314
Nigeria 440
United States 400
Indonesia 366
Pakistan 363
Brazil 227
Bangladesh 202
Congo, Dem. Rep. 182
Neeraj Chauhan, CFP 13/07/2014
Emerging retirement income market
Neeraj Chauhan, CFP 13/07/2014
Neeraj Chauhan, CFP 13/07/2014
Neeraj Chauhan, CFP 13/07/2014
By mid-century, this 60+ age group is expected to reach 19% encompass 323 million people, a number greater than the total U.S. population in 2012.
Neeraj Chauhan, CFP 13/07/2014
Challenges
Neeraj Chauhan, CFP 13/07/2014
Increasing Life Expectancy
57 59 60 62 63 64 66 68 69 75
0
10
20
30
40
50
60
70
80
Age
Age
Neeraj Chauhan, CFP 13/07/2014
Significant health problem
Neeraj Chauhan, CFP 13/07/2014
Almost one-half (47 percent) of older Indians have at least one
chronic disease such as asthma, angina, arthritis, depression,
hypertension or diabetes
Neeraj Chauhan, CFP 13/07/2014
Fewer than 10 percent of Indians have health insurance from private
or public sources, and about 72 percent of health care spending is
paid out-of-pocket
Neeraj Chauhan, CFP 13/07/2014
Can’t forecast size of their retirement bucket
Neeraj Chauhan, CFP 13/07/2014
Too much life, not enough money as Less
than 11 percent of older Indians have a pension of
any sort
Neeraj Chauhan, CFP 13/07/2014
Shift in formal retirement savings plan from defined
benefit to defined contribution
Neeraj Chauhan, CFP 13/07/2014
Savings are frequently invested in low interest
bearing Instruments.
Neeraj Chauhan, CFP 13/07/2014
Accumulated capital usually end up being
diverted to necessities other than retirement.
Neeraj Chauhan, CFP 13/07/2014
Many Indians are heavily reliant on investments in property and are hence very exposed to illiquidity & movements in property values.
Neeraj Chauhan, CFP 13/07/2014
Emotional bias
Fear
Aggressiveness
Regret
Susceptibility
Inertia
Neeraj Chauhan, CFP 13/07/2014
Nuclear family Structure and inability of families to support
elderly
Neeraj Chauhan, CFP 13/07/2014
Low financial literacy
Neeraj Chauhan, CFP 13/07/2014
Silver lining
Neeraj Chauhan, CFP 13/07/2014
High Savings ratio
Neeraj Chauhan, CFP 13/07/2014
Growing Economy
Neeraj Chauhan, CFP 13/07/2014
Expectations
Neeraj Chauhan, CFP 13/07/2014
Education
Decision Support
Advice/ Marketing info
Healer
Trusted Counselor
Neeraj Chauhan, CFP 13/07/2014
Delivery
Neeraj Chauhan, CFP 13/07/2014
Retirement planning is smartly shifting purchasing power from period of high earnings (the working years) to those of low earnings (Retirement).
Neeraj Chauhan, CFP 13/07/2014
Get real about Goals
Income
Outgo 13/07/2014 Neeraj Chauhan, CFP
Right combination of retirement income tools for both
retirement accumulation
&
retirement distribution.
Neeraj Chauhan, CFP 13/07/2014
Appropriate
Asset allocation,
diversification ,
rebalancing.
Neeraj Chauhan, CFP 13/07/2014
Adequate Risk
management
•Red Zones
•Health
•Expect the Unexpected
Neeraj Chauhan, CFP 13/07/2014
Fiduciary behavior
Neeraj Chauhan, CFP 13/07/2014
A plan that alleviate their fear, allowing them to retire with confidence and leisure.
Neeraj Chauhan, CFP 13/07/2014
Give an attitude of abundance over scarcity with focus on life time income and spending.
Neeraj Chauhan, CFP 13/07/2014
Shift focus and spotlight from
Investment portfolio to human capital with life
cycle approach. Neeraj Chauhan, CFP 13/07/2014
People care more about their lifetime standard of living than about their wealth and this requires a shift from return management to risk management.
Neeraj Chauhan, CFP 13/07/2014
In the End
It’s all about Arranging lifetime consumption in the safest way possible given finite lifetime income over building largest possible portfolio constrained by risk tolerance.
Neeraj Chauhan, CFP 13/07/2014