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Retirement planning is a big concern for every one. You always pray for a smooth transition with family, friends and also, enough funds.
In the 1950s, Abraham Maslow put all this in form of a theory, popularly known as the "Hierarchy of needs". In brief, it basically addresses the issue of "survival to self-actualisation".
The first step in Maslow's ladder is "psychological needs" that dominate our lives. These include our basic needs of food, clothing, shelter and others. Once these basic needs are taken care of, we move to our next set of needs, called "safety needs." We need protection, stability and of course, a society which has proper law and order.
After that comes the need for belonging through family, friends and community. And then, there is the need for self-esteem, which comes through status, fame, dignity and ability to influence decision making in the family or community. All the above four needs called "deficits needs."
The last need is popularly known as the "need for self-actualisation." Seldom can one satisfy this last need. It is the endless drive to be all that we "can be" or "can achieve".
Similar to the working person, even the retirees follow the same hierarchy of needs. The first and basic retirement need is food, clothing and shelter. Retirees - like all of us - have the fear of survival. Will my wealth outlive me or will I outlive my wealth is the question that they ask themselves. This basic need can get satisfied with the creation of retirement corpus.
Once the basic need is satisfied, next is need for security and protection. Here we are not just referring to physical protection but also financial protection. Most retirees choose debt-based instruments, as they give security of principal (though it loses to inflation.) Pension system is one form of security for retirees.
The next is a system where they will be safe. With the growing instances of physical assault, thefts and murder on senior citizens on the rise, the issue has to be jointly being addressed by police, government, society and community.
Retirees seek love and warmth of family, friends and society. In the Indian society, elders are a part of the family. Beyond family members, today there are a large number of formal and informal community/activity centres where the retired can meet and spend time together. The sense of belonging is going to be addressed by such centres.
There is a serious requirement of specialised colonies that will cater exclusively to the needs of the elderly. These colonies will need to have several facilities like basic health care, round the clock security and recreational activities. Also, they have to address basic and safety needs.
However, as of now, Indian companies are not aggressively coming out with specialised products like accommodation and insurance for the retirees. This is primarily because we are still living in the world where it is assumed that the retired would not have corpuses to fund these products.
The next generation of retirees would definitely have better corpuses, encouraging companies to create specialised products for them. The retiree of today has more money power than what his parents or grand parents had.
They are very status conscious and seek a lifestyle. The ultimate need of self-actualisation can be addressed by giving back to society by using their skill set.
Retirement planning is not restricted to a mere number. It is more to do with satisfying the needs of the person. And since they are not all financial needs, one will need to understand that a great corpus is just not enough.
The writer is a certified financial planner.
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