YOLO and Retirement Goals - How to Strike the Right Balance?

 

Chances are, if you are a millennial, YOLO is your mantra. For those who don't fall under this coveted demographic and are as yet untouched by its momentous implications, YOLO is short for 'You Only Live Once'.

At last count, India had at least 400 million millennials, making up a third of the population and 46 per cent of the country's workforce, according to a report by Morgan Stanley. Most of them are living up life - travel, party and experience are the three pillars on which their YOLO credo stands firm. This group of generations - born after 1982, is also one of the luckier ones - advances in medicine and technology have smoothened their journey of life and also made it healthier and longer. Which means you do live only once, but you are also going to live far longer than your grandparents did. It also means that once you hang up your boots after working at a job or multiple jobs over the years, you will still have several good years of life to enjoy with your loved ones.

Ergo, you only get one shot at life, but also one shot at saving for these retirement years.

The YOLO checklist

Why has the YOLO principle gained so much popularity? After decades of scrimping and saving through the war years and struggling to survive in developing economies, the generations born in the 1980s naturally prized the value of life and wanted to extract the most from this one lifetime granted to us.

Go, see the world!

The YOLO generation seems to prioritize travel experiences. Millennials in the West take, on average, 6.5 trips each year, with an average of 6.2 days spent on each trip. They are either ticking off bucket list items or going for "once-in-a-lifetime experiences". Millennial Indians are fast catching on to this trend too.

Beat the stress

Millennials are in a constant search for relaxation. In fact, in one study, 83% reported the desire to disconnect from their busy lives and engage in all-day relaxation experiences, whether this involved napping on the beach or visiting the spa. Most of us are living high stress lives, and 'enjoying the moment' is a great way to beat this stress.

Experience, not possess

Most of us also want to snap out of the vicious credit card and EMI cycles and use our finances to fulfil ourselves in the present, rather than building a future for the family and for unborn generations.

YOLO, but it's going to be a long innings

There is indeed a lot of merit in balancing a life between work, leisure and self-fulfilment. However, you're not young forever. And the years you lose in retirement planning can never be recovered financially (unless you win the lottery or land yourself a sweet job). There is no dichotomy between aggressively saving for financial independence vs. enjoying life now. The underlying assumption is that enjoying life now requires sacrificing savings (aka spending a lot of money). And that's not true.

All you need is a bit of prudent planning right from the summer years. The Rs 50,000 or so that the average millennial spends on traveling in a year could grow into a pretty healthy nest egg. In fact, it would equate to a healthy Rs 4 crore if you started saving at age 25 and retired at 65, assuming a conservative interest rate.

Why do I need to save so much?

India has seen an improvement in overall life expectancy at birth to 69 years, with women expected to live for 70.4 years and men for 67.8 years, according to the latest Sample Registration Survey (SRS) for 2013-17. That's a quantum jump from just a few decades ago, when average life expectancy hovered in the early 60s.

On an average, in India, a man will live for another 17 years and a woman for 19 years after turning 60, according to a survey done by the Sample Registration System (SRS) under the Census office.

The concept of retirement at 60 originated in Europe in the mid-19th century and has undergone very few changes over the decades. But with the world changing by leaps and bounds in the last few decades, that concept is fast losing its corollaries - that a retired person would lead a detached, sedentary, unproductive life. Nothing could be farther than the truth. Examples of the 60+ who travel the world, aggressively pursue their passions and even turn entrepreneurs are all around us.

Is there a balance between YOLO and saving for retirement?

Everyone can have the lives they dreamt of, by using the right tools and having the right expectations. You don't have to stop enjoying the present in deference to the future. That bucket list of things to do before you turn 40 can still be worked through.

Taper the Travels

Make a travel fund for each year, but also put aside a certain sum towards retirement. Instead of splurging on the holidays, economise on expenses where you can. Cutting small corners can go a big way in adding to your savings.

Live like there's no tomorrow, but also save up to achieve your goals

This may sound like an anachronism but while you are maxing out your credit card, remember that the payments will be due soon. Make a list of your life goals and trim the superfluous expenditure on too many clothes, shoes and parties. As the current global pandemic has shown us, we can actually do without many of our luxury purchases!

Visualize yourself in the future

Work backwards. Know your target retirement amount, accounting for healthcare, inflation and living expenses of your dependents. Take the help of online tools and calculators to estimate the figure you need to reach by the time you are 60 to help you save for retirement to have a good quality of life. Knowing this number makes it possible to balance the life we want today with the life we want tomorrow.

A sound plan like HDFC Life Pension Guaranteed Plan is also a smart way to ensure a regular income stream post retirement. And if you are keen to ensure that your accumulated wealth ends up in the right hands after you, the HDFC Life Pension Guaranteed Plan.

Now, YOLO and retirement goals can walk hand in hand, without causing you any worries!

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