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Planning for retirement as an SME

Planning for retirement as an SME

Finance & Accounting

Anirudh Gupta

Anirudh Gupta

21 Jun 2018, 09:39 — 4 min read

Summary: Retirement is not just a reality for most entrepreneurs, it is something that becomes essential with age. Therefore planning for retirement is crucial. Starting on this journey today will help put you in pole position to enjoy the golden years of your life.

 

“Retirement? I will work forever!”

 

Interacting with hundreds of clients in the Small & Medium Enterprise (SME) sector we have realised that this is generally their first reaction when asked about retirement. This may just be what many self-employed individuals think. One always has to be capable of providing for wants and needs. Given that nowadays one can live a hundred years, the question of retirement becomes more pertinent.

 

Life for an entrepreneur is a mix of passion, profession, business and giving back to society. This is a feeling which many people feel and have experienced at the stage of life when they are running a company. Retirement is a huge change. What is the way one can plan?

 

If you are looking at developing a vision for your retirement life, you can look at certain buckets:

  1. Savings should last 20 years

  2. Developing a routine

  3. Healthcare

  4. Travel

  5. Philanthropy

 

Here is an analysis of these categories that pertain to retirement:

 

1. Savings

70% of worries are financial for most people. Especially in a retirement situation wherein the income is not there or there is limited income from business operations. Savings need to suffice 20 years of post retirement life. An ideal retirement portfolio needs to be 50% fixed income (FD & secured debentures), 20-30% moderate risk ideas, and 20% rental income.

 

2. Developing a routine 

Assuming that savings are in place, a retired SME needs to develop a routine which keeps one fulfilled, happy and productive. For instance, one of our clients balances his work and philanthropic activities in a mix of 50:50 and this keeps him active and engaged.

 

3. Healthcare

Healthcare is a huge factor in old age, and having enough funds to ensure that one gets the care they need at the right time is crucial. Investing in medical insurance is a good place to start planning for future retirement.

 

4. Travel

One of the benefits of retirement is that one can travel more frequently and go for holidays in the off season as well. Traveling off season can save on costs. One can travel to the extent one’s health is willing.

 

5. Philanthropy

Philanthropy is a way of committing time to social causes like teaching at an NGO apart from financial contributions. Many social organisations like Rotary/Lions support both a time commitment as they need volunteers as well as financial contributions to implement projects in India as well as internationally.

 

So, whatever stage you’re at in your career, it would be wise to plan for your golden years starting today.

 

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Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views, official policy or position of GlobalLinker.

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Anirudh Anand Gupta

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