Having spent a lifetime adding value to different organisations ( instead of one, and getting a pension/gratuity and other terminal benefits) and being aware of the complete lack of any social security in my country for the old, I am reasonably qualified to write about this.
First, this might sound foolish or stupid to those elders who get a pension, have been corrupt, etc. for this is about regular middle class senior citizens, who for innumerable reasons could not have a pensionable job or great terminal benefits.
It is not as though senior citizens today have not seen crisis. Many have seen
1. Energy crisis/emergency/war in the 70's
2. Great Indian Recession 1991- Hyderabad Allwyn was privatised soon after this
3. East Asian Crisis 1997- I remember my losing a job with a MNC due to this and the boss saying the directors had decided to exit Asia!
4. The sub-prime crisis of 2008 ( am sure 9/11 in 2001 had its impact on India also).
Not to mention short bursts of uncertainty with factors like devaluation which were many in the last 3-4 decades
While these situations in life might have provided a more balanced perspective to life, expenditure and savings, the impact in absolute terms was also substantial.
Today, the diversified portfolio ( to reduce risk ) of stocks, fixed deposits, housing or real estate paint a rather gloomy picture for the senior citizens. Yes, Gold has gone up, however, asking aunty to sell the gold is not possible until you have no food to eat.
The investments in stock have not only eroded in value, it does not appear like dividends will be coming by in double digit percentages of investment. How did I forget dividend is paid on the paid up value and not the price I paid for the stock? :)
Returns on fixed deposits have reduced substantially. On an investment of Rs.15 lakhs using decades of saving for old age the returns have fallen from Rs.9000/- per month a year ago to Rs.4350 per month. By the way the PMVV scheme is closed as of 31st of march and even though I could fill the form online, could not make the transfer thanks to the pandemic working hours/days.
Returns on real estate have always hovered around 4-5% per annum, however, when tenants tell you that based on the governments suggestion, they will take a three month waiver and renegotiate at the end it all, it is a big blow to the senior subject.
.
Governments all over the world have announced huge sums of money to be paid to companies and banks to get over the crisis. The last time it happened senior executives/owners of such recipient companies not only took their salaries but huge incentives as well, running into millions. Thanks to the deep nexus between politicians and the corporate world, no additional long term commitment towards healthcare has been announced by any government and senior subjects, less said the better. Governments are hoping many of them will not remain after this crisis!
There is no option for surviving seniors to try to get back into the job market. This will only create reduction in rates, animosity for the seniors and generational conflicts at the workplace. One friend suggested yet another option, cut costs! This might be possible for some, however for the vast majority who have spent a lifetime paying back a variety of loans apart from enduring periods of unemployment this is a tough call.
Like everything in life, this too shall pass, however it should hopefully happen during the lifetime of the senior subject ! In the meanwhile, Eat, Pray, and Love !
The title is corny and laboured, Can you suggest a cleaner one?
First, this might sound foolish or stupid to those elders who get a pension, have been corrupt, etc. for this is about regular middle class senior citizens, who for innumerable reasons could not have a pensionable job or great terminal benefits.
It is not as though senior citizens today have not seen crisis. Many have seen
1. Energy crisis/emergency/war in the 70's
2. Great Indian Recession 1991- Hyderabad Allwyn was privatised soon after this
3. East Asian Crisis 1997- I remember my losing a job with a MNC due to this and the boss saying the directors had decided to exit Asia!
4. The sub-prime crisis of 2008 ( am sure 9/11 in 2001 had its impact on India also).
Not to mention short bursts of uncertainty with factors like devaluation which were many in the last 3-4 decades
While these situations in life might have provided a more balanced perspective to life, expenditure and savings, the impact in absolute terms was also substantial.
Today, the diversified portfolio ( to reduce risk ) of stocks, fixed deposits, housing or real estate paint a rather gloomy picture for the senior citizens. Yes, Gold has gone up, however, asking aunty to sell the gold is not possible until you have no food to eat.
The investments in stock have not only eroded in value, it does not appear like dividends will be coming by in double digit percentages of investment. How did I forget dividend is paid on the paid up value and not the price I paid for the stock? :)
Returns on fixed deposits have reduced substantially. On an investment of Rs.15 lakhs using decades of saving for old age the returns have fallen from Rs.9000/- per month a year ago to Rs.4350 per month. By the way the PMVV scheme is closed as of 31st of march and even though I could fill the form online, could not make the transfer thanks to the pandemic working hours/days.
Returns on real estate have always hovered around 4-5% per annum, however, when tenants tell you that based on the governments suggestion, they will take a three month waiver and renegotiate at the end it all, it is a big blow to the senior subject.
.
Governments all over the world have announced huge sums of money to be paid to companies and banks to get over the crisis. The last time it happened senior executives/owners of such recipient companies not only took their salaries but huge incentives as well, running into millions. Thanks to the deep nexus between politicians and the corporate world, no additional long term commitment towards healthcare has been announced by any government and senior subjects, less said the better. Governments are hoping many of them will not remain after this crisis!
There is no option for surviving seniors to try to get back into the job market. This will only create reduction in rates, animosity for the seniors and generational conflicts at the workplace. One friend suggested yet another option, cut costs! This might be possible for some, however for the vast majority who have spent a lifetime paying back a variety of loans apart from enduring periods of unemployment this is a tough call.
Like everything in life, this too shall pass, however it should hopefully happen during the lifetime of the senior subject ! In the meanwhile, Eat, Pray, and Love !
The title is corny and laboured, Can you suggest a cleaner one?
Beautifully penned,views are relevent to me and lots of people like us,at least you were working till retirement,but people like me wanting to be a great successful entrepreneur,lost money,valuable time with family,not taking proper vacations and on and on,struggling,manupulating,money and situations.only some are gifted, whatever, however brilliant you are,one should have luck,and the time should favour.any way got to be satisfied with good loving friends like you.
ReplyDeleteI’m going to put a spin on this (you knew I would ��). First of all, I think retirement is a myth that all of us the world over need to stop believing in and worshipping. After all, what’s so great about atrophy? Secondly (and this is tough for the current crop of Indian middle class seniors because most of us were brought up to believe in a steady pay check, loyalty to one company and a pension or provident fund), seniors need to stop believing that anyone (employer, govt, kids, friends) owes them anything- regardless of what they may have done or perceive to have done. This is the first step towards individual realization- which surprisingly is written all over our dharmic literature- remember Yudhishtra? He took off alone with a dog when he was all done...So if you buy into this (it’s not mine, it’s buried in the glorious 5000 yr history and literature we always love to brag about), then each senior needs to figure out what unique set of experience and expertise they have to add value to society. And make a living. It’s difficult but not impossible. First step is to change mindset. That’s the toughest step. You have articulated the current state very well, Sudhi- now on to solutions !!
ReplyDeleteVinay, Every word you have put down here is worth its weight in gold! The post unfortunately came to appear negative and hopeless 😔. That was surely not my intention. There are two things that disturb me in the present circumstances. 1. That everytime there is a impact on the economy, large companies and their senior executives get a large portion of the loot, while constituencies like seniors are completely ignored. Not one government announced any commitment to improve health care, see the revival packages in US, India, UK and even Italy! 2. While the idea of private property, price mechanism etc appeal to me, someone getting 500 times the income of the lowest paid employee, without significant measurable contribution in terms innovation, risk taking or just descision making is too unfair. Company executives, we know exactly what they do! I agree with you and have never dependent on anyone or any institution, however, retirement is a myth would not be acceptable to me because I see my faculties deteriorate at whatever pace. Thank you very much for such insightful and thought provoking comments
DeleteSudhi - the one thing I'd suggest is to learn more about the realities of "deteriorating faculties." While common wisdom seems to point to the fact that we become decrepit (!!!) as we age - in reality it is much more nuanced. The executive function of the brain actually gets better as we age to compensate for the quick grasping part (hence, "wisdom"). It is actually quite fascinating. Check out a guy called Chip Conley - he talks about becoming a "modern elder" rather than becoming old. As to the compensation gap - I can understand the angst. I think I'll have to see you in person - to fully articulate my POV on that! So either in Pittsburgh or in Bangalore!!! Also - my comments aren't aimed personally - I know you didn't depend on anything, etc - just trying to shake up folks who may be waiting for someone to save them. There's no one out there. Better figure this one out ourselves!!!
Deletehttps://www.nytimes.com/2020/04/24/nyregion/coronavirus-elders-nyc.html
ReplyDeleteSirji, on the face of it this looks shit scary as to where are we heading towards at this rate. You have rightly pointed out the of ire of the senior class. As they say rich can feed themselves, poor will be taken care by government and middle class are left at crossroads. May be SIP would be an answer, keep invested and invest right away!!! No other title could be as better as this one!! Cheers sir.
ReplyDeleteInspiring writings and I greatly admired what you have to say , I hope you continue to provide new ideas for us all and greetings success always for you..Keep update more information..
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There are certain realities of life. The need is to be realistic and practical. If we have been even a little prudent and built savings and assets, we should not hesitate to use them for ourselves. After all we saved for our future needs too. Taking a reverse mortgage on property, if needed, is a good option to lead a happy life post retirement also. We need not look at only interest as the amount available to us.
ReplyDelete
ReplyDeleteThere are certain realities of life. The need is to be realistic and practical. If we have been even a little prudent and built savings and assets, we should not hesitate to use them for ourselves. After all we saved for our future needs too. Taking a reverse mortgage on property, if needed, is a good option to lead a happy life post retirement also. We need not look at only interest as the amount available to us.