I flew to Karachi a few days ago to attend my khala’s 90th birthday. The celebration was attended by all of her children, who were delighted to see their mother thrilled to bits. Numerous grandchildren and great-grandchildren were also in audience, doing their bit to make it a truly memorable occasion. My khala is not a well educated woman, has never had a professional career, has never made any financial provision for the future and has spent all her life slaving after her children and, now, her children’s children.
She lives in an annex attached to her son’s house. She is very content with her life, but she defies the rules of financial planning. She has put all her time, effort and money into her four children and has made no financial provision for herself. Now, the question is: has she got it right? Did she choose the right retirement strategy? Or was she just plain lucky?
I have to say that she was lucky. Her late husband used to work in a fairly nice company, and according to the Pakistani pension plan:
It is two or 2.5 into number of years worked for = per cent of last basic salary, which in my khala’s case amounted to Rs30,000, and after her husband died, she used to get half of it, that is, 15,000 monthly.
It won’t have been possible for her to live amiably if her children were not considerate enough to understand her financial needs. Yes, surely, she was lucky!
My husband and I both agree that that we don’t want to depend on our children to provide for our post retirement years because there are just too many factors plunk in the way of making this strategy work. What if they are not supportive and caring enough in the long run? What if their spouses are not willing? What if they are facing difficulties in making their own ends meet? Therefore, it would be wise to leave the kids out of our retirement plans.
I suggest the conformist one of saving for your own retirement. You can do this in a number of ways. You can make ad hoc lump-sum investments into various assets like gold bullion. These days rising price may have drawn a lot of attention but I don’t think the party is over yet. My sister has been buying gold bars worth Rs5,000 for the last eight months. If she needs cash in a hurry, she can take them to a jeweler and redeem them for cash on the spot.
Like any other high profile investment opportunity, I feel the stock market is a very lucrative option too. It’s true that the twirl in the stock market can cause both large losses and large gains, but if your investment time horizon is long enough, these short-term fluctuations will result in relatively high returns. What’s important is to make a portfolio with a healthy mix of high risk, high return investments and some which provide a stable regular income.
The next question is how much do you need to save? Well, this depends on the lifestyle that you want during retirement, the number of years you have to prepare for it, the amount of money that you have already accumulated or expect to receive from inheritances, for example, and the success that you have with your investment strategy relative to inflation.
If a lifetime of saving depresses you, then you can always adopt my khala’s strategy with a lifetime of self-sacrifice and hope that your children will do the honors. I prefer to save.
The writer is a freelance business journalist
and also a housewife
