Unlocking Your Retirement: How Long Should Your Cash Flow Last ?

dear viewers welcome to yet another episode of your life your money the topic that I have picked up today is about building the retirement cash flow it is a tricky situation it's not as simple as it looks like I will be taking up one portion of retirement cash flow today till what age should you create a retirement cash flow what are the pluses and minus and what kind of challenges you face when you build a retirement cash flow all these things I'm going to discuss in this video video and try to help you arrive at

a suitable answers this is NRI money clinic for you and I Dr Chandra Khan your financial guide for a happy [Music] living NRI money Clinic no hype just the right advice first of all we have to identify why retirement cash flow is very much required you could be having a lot of wealth a lot of cash funds in your bank account but you need to create a cash flow if you do not understand why it is required to be created then the mistakes will start happening from there onwards imagine your life during your working days

month after month at the end of the month you get a salary this money keeps getting credited to your bank account and that creates a comfort zone for you what happens to your investment whether you have an Emi loan some problem it doesn't matter because month after month this money keeps coming to your account now when you retire this comfort zone is taken away from you now if you do not create a cash flow and some money in a defined benefit form doesn't hit your bank account make no mistake most people will feel fish out

of water so it's absolutely essential it doesn't matter from where the cash flow is going to come from it could be a bank interest it could be annuity it could be pay out from some plans it could be rentals anything is fine but a defined pay out has to come and hit your bank account month after month you could be a fit and fine person you can analyze things you can manage your wealth but that is during your younger years that is during your working life but life beyond 60 years is not under your control

there are many things which will happen without your control your life is a plan designed by God you can become a victim of dementia you can't remember a lot of things you can be a victim of alimer you could become a victim of uh critical illness you can just fade away without any prior intimation that's perfectly possible think about your spouse at that point of time you could be managing money very well does your spouse is able to handle it so what she requires is the comfort of certain amount of money coming and hitting the

bank account that comfort zone should be created therefore creating a cash flow becomes an absolute must during your retirement days I said that it is AB absolutely essential for you to build a cash flow but building a cash flow is a very very tricky situation it's not easy to build a retirement cash flow why there are many things which are unknown first is inexperience you don't have an experience of your retirement you take it up as things come you don't have an income so you are taking your life on without an active income coming to

you so you just don't know how your life is going to be beyond that point how long you're going to leave will you leave up to 70 75 80 85 90 years or more than 90 years not no what is the age gap between you and your spouse people of my generation are about 10 15 years younger than me used to marry with the age gap of at least 4 years and I know of cases where people have married 10 12 or more years younger than them women tend to live longer than men and when

this age gap between husband and wife widens then the whole calculations have to be seen in a different angle how do I build a cash flow if I ask somebody to put money in a bank FD which is what most people do you carry a reinvestment risk interest rates have been falling on for a long period of time I've seen periods of interest rate being at 14% they dropped to five off six climb to 99 and a half in the last cycle they dropped up to 4 and a quarter or 4 and a half% then

they moved up to about 6 and a half seven and we are looking at one interest rate leg down what will be the future interest rate how will I project the interest rate for next 10 15 20 30 years difficult if you depend on mutual fund the performance of mutual fund depends on the growth factors the inflationary trajectory what will be the growth in the future I do not know look at what happened in Japan look at what happened in China look at what happened in US between 2000 to 2010 that does not give any

comfort to put only the money on mutual fund not advising you that you should not put money on the mutual fund I'm just trying to draw your attention to the complexity of the situation so it is very very difficult how long you live age Gap interest rate growth all these things can become a problematic thing amidst all these things we have to find a solution which is more suitable to you needless to say it is a very tricky situation it calls for professional assistance you don't have an experience for this if you are somebody who

is looking out for an assistance to build your retirement cash flows and you feel that you can't attend to it you can make best use of services provided by NRI money Clinic we have assisted thousands of families across more than 60 countries we have 30 years of experience watching the life of people what happens during the retired life if you have an intention all that you how to do is our numbers are given in the description box below we have also provided a link over there just just go and send us a WhatsApp message click

that link it takes you to the WhatsApp send us an exploratory message and request for assistance in retirement planning our team of experts are always ready to help you why delay send that message now retirement cash flow building is tricky situation just not for the investors it's a tricky situation even for the financial planners it takes a lot of time for them to get a foothold of how to design a cash flow they also don't have an experience you come into this line and it takes time for you to find out what exactly happens if

some financial planners have worked under senior financial planners who had a good experience of uh this particular field or they have observed several families going through these uh particular issues over longer periods of time they can get a knowledge by that but I see a lot of YouTube videos many of these guys are very young persons I appreciate their enthusiasm sometimes I see what they say is not connected to reality most of the times because when somebody who is in his 20s or mid 20s or slightly later 20s talks about retirement number and makes videos

around that his inexperience speaks you are looking at only a money angle and you're trying to use your Excel sheet experts to create how much money you need you're either trying to create a scare or you're trying to spoil his presence all these things will happen it is very tricky situation for the planners also because they have not seen the market Cycles they have not not even understood how the stock markets behave over longer periods of time how long the markets can remain static what happens when the market comes crashing down what if the markets

were to not move ahead for a longer periods of time they have not put time and energy to study different market across Globe so depending on stock market to beat inflation is a right thing to do but over dependence on it or to think that it's a linear equation is inviting trouble so it is very essential that you should work with experienced financial planners in reality what investors do investors will handle it with a very simplistic approach their inexperience speaks there uh when we get a chance to interact with a lot of our prospects we

spend a lot of time trying to understand their life their orientation the risk profile what they think it takes a great amount of time trying to understand or convince them what they need to do uh many people will say our children will take care of ourselves so there is no need to build a retirement cash flow if I have some money that's enough there are people will who say don't create a cash flow for 15 20 30 years uh you do it for 5 10 years that's fine I don't think I will leave for that

long I will die by 70 years my dear friends when you die is not under your control you can't automate it by the time you retire you say my money will run out and I will give an auto instruction to the hospital or to send a message to got that I will leave only for so many years how long you're going to live is not in your control therefore don't make these kind of simplistic assumptions as I said women live longer what if your wife were to live long and she can't handle finances well would

you like to leave behind his Dependable cash flow for her take that also into account there are people will say I want all my money immediately they put in some plan which creates a cash flow and when we when I say them your principal amount comes you either after your death or after 20 25 years they say no no no I don't want to leave that money there for such a long period of time I want all the money back at the earliest possible thing it's easy for us to do that but think about it

what if we try to do what happens number one you will be exposed to a reinvestment risk let's say that you got a CR of rup as your retirement Corpus and I create a cash flow for you for next 10 years and at the end of 10 years you get all the one CR back to you what will you do with that money you can't go on a holiday there you have to reinvest this money which means you are re-exposing yourself to an interest rate which is prevailing on that day as I said the long-term

interest rate trajectory is down so unnecessarily do not ask for your Monies to be paid back to you at the earliest likewise don't say that I should enjoy all the money during my lifetime how will you Ure you will have residual money at the time of death you can't consume all the money and say my bank balance has gone zero let me exit this world that luxury is not available to you you have to leave behind some money because that is the side effect of retirement planning some money should be there therefore it is not

possible that you can say that I have to enjoy all the money by myself that's that's not possible so anything and everything around that cannot be seen with a simplistic angle any approach that you take you should ask what can go right what can go wrong if it goes right right that's perfectly fine what if it were to go wrong I should have a plan B I should have something in place to take care of it therefore when you are designing a retirement cash flow do not handle with kid glows it should be designed with

all the seriousness and you should look into all metrics and you should look at all possible scenarios and the cash flow should be designed I'm not asking you to make it very complex I'll give you three words which you have to keep in mind the retirement cash flow that you design should be constant it should be reliable and it should be sustainable and I'll explain the meaning of these three when you say constant it means it should come as a defined benefit at defined periods of time if it is every month every quarter every half

year or every year as you want it to be it should come and it should give that comfort of the salary what you are drawing during your working years that is the meaning of the word con so there should be some portion of your money which should come as a defined benefit don't worry about your return none of these things will matter what matters is constant money hitting your bank account number two it should be realistic people will say I should get 2 lakh rupees 3 lakh rupees 4 lakh rupees don't go with all these

things be governed by what you really need how much you need at 60 years of age cannot be seen when you are at 30 years of age or at 40 years of your age maybe 45 50 years of age you may get an inkling of that see I'll tell you when I started my job my initial salary was 1,200 rupees and drawing at 1,200 rupees if I say my retirement cash flow which is required today is about 3 lakhs or 4 lakhs just doesn't make sense you can't even imagine that so the idea comes to

you when you come closer to your retirement days 5 years before you will have an idea clear idea about how much money you might need so when you are designing design it in a realistic way suppose you need a lack of rupee don't go for creating 50,000 Rupees as your cash flow that will not work you'll be starving if you get at 1 lakh rupee that's realistic you want to add some amount of safety into it so you add 10 20 25 30% extra into it make it 130,000 your argument is today I get 1

lakh rupee over a period of time there will be some erosion of purchase price so I don't have to calibrate again for next 5 6 7 years so create some 20 30% extra that's perfectly fine that is called a realistic the third word that you have to keep in mind is it should be sustainable what do you mean by sustainable there is two meanings to sustainable one the cash flow that you create should last long throughout your life so you create an excessive cash outflow from the Corpus that you have and suddenly Midway the Corpus

gets exhausted so that's not useful that is what these guys this mutual fund guys will tell you create anwp of 10% 12% so you simply you keep blah bling anything if the markets become stagnant and you are the markets are not creating returns year after year you eat into your Capital so that means you are looking at an erosion of your Capital itself so that is not sustainable so don't look at that sustainability the other word for sustainability is over a period of time it should withstand the erosion of purchase price that means your cash

flow should be made into an inflation proofing so it is not possible to create a cash flow with inflation proofing by any single specific product the unfortunate part of retirement planning is it is not possible to create a retirement cash flow with only any one single product or any one single asset class what is required is the combo Solutions around it and it should answer all the questions of will it give give me a constant income is the income that I am deriving is it realistic can I still leave or I have to starve or

I am wasting my resources and will it remain sustainable will my Corpus last during my entire lifetime the cash flow that I'm getting will be meaningful for me and it will not go through a purchase price erosion you should answer these question and that is how you are to build your retirement cash flow Therefore your retirement planning should be like designed like an aircraft an aircraft is overdesigned and for safety you see if you're flying by an aircraft they have so many safety features built into it they have even for a water landing uh when

did you hear the flights landing on the water lacks and millions of flights take off day and day out and in in my memory I know of only one case of flight landing on water that's in Hudson River in USA so when you know that flights are unlikely to land in water you still carry those safety features why if you do that mistake and if the flight were to land on water then you have no survival chance your retirement is no different when you are retired day after day month after month year after year you

are becoming weak and weak and weak you are getting isolated you and your spouse will leave at one place at one point of time one of you will live leaving the other person all alone your children could be settled in some other part of the world you don't know how the growth interest rates and other things will work out and if there is a wrong calculation in any any one of it then your retired life will suffer therefore take my advice design your retirement for overdesigning for safety ask everything that can go wrong what can

go wrong if that event were to play out how I am protected is my strategy that I adopted takes care of all these things that's the way you have to build a retirement cash flow now based on my experience and I have worked with thousands of families uh what could be an ideal age till which you have to create a cash flow an ideal age is throughout your life but when we say throughout your life we don't know what's your longivity will you live up to 100 years or 90 years we don't know so a

practical idea I would suggest is take it up to at least 85 years of age 85 years of age you can be reasonably certain that over 90% of the people would exit this world so 85 years of age appears to be a decent age number which you have to work on when you are mentioning 85 years it is not 85 years of you between husband and wife whoever is younger take the cash flow up to 85 years of the younger partner that becomes reasonable even after considering that cash flow up to 85 years of age

we still have one problem what if I live longer than 85 years of age that problem will remain therefore even when you're considering the cash flow to be created up to 85 years of age make sure that you have some amount of Corpus kept separately and it grows in wealth and if you were to be the lucky one to last beyond 85 years of age where the cash flow stops you still have some amount of money to dip into from your wealth part likewise when you are creating a cash flow always try to create a

joint cash flow that means husband and wife A and B whoever lives this world the cash flow that you have designed should continue for the surviving partner that's the right way of building your retirement cash flow one of the things that you have to keep in mind is how do you spend your money during your retirement days uh you will not know about it right now but I'll tell you from my experience how people spend their money from 60 to 75 years of age people will go for Revenge spending that means all these days you

are busy working and you didn't have time to move around the place wife will start cribbing we could not go there we could not meet somebody we want to see places I want to go on a pilgrimage whatever that could be between 60 and 75 you can't say two things I don't have money no you have a big Corpus of money I don't have time no you have time therefore you will start spending whatever you did not do during your uh working years you start doing it creates in many of the families a kind of

Revenge spending that means I want to do it so people spend a lot of money between 60 to 75 I will still say this is a youthful year because you are still not dependent on others you can take decisions on yourself you don't need an external assistance your senses are still fine except for those people who are unlucky so you continue to spend your money post 75 years of age it's a period of perod one after the other living this world you become weak uh you may need somebody else to take you around your travel

comes down lifestyle comes down eating comes down moving around comes down most of the times you will be in one single place or depending on somebody else even though if you have the money the chances are that you are not able to spend a great deal of money Beyond 75 years of your age unless you do a lot of Charity or most of this money goes into the hospitals one another point is beyond 75 years of age it is fair to expect one of the partners to leave now let's say that you have created a

lack of rupe as your retirement cash flow and it is for two people now because one of the partner leaves it is for that money which was designed for two people is meant for only one person that also comes to your rescue so keep this in mind when you are designing your retirement cash flows you will spend a lot of money between 60 to 75 years of age post 75 your appetite to spend money itself comes down and if spous were to leave earlier then is only one person who will be uh living in this

world now coming to to the question of how will I really build the cash flow it's a complex process I will not talk about it in this video in the past we have done a lot of videos what is the best retirement strategy you can see that video on our uh Channel there it's a very popular video how you can build your retirement cash flow what are the instruments that you can utilize and uh what are the factors that you have to keep in mind there are detailed videos on this nevertheless with the updated version

I will produce a video in a couple of weeks from now stay tuned to this Channel and I will definitely come out with one another video what all the things you can utilize to build your retirement Cash Flow by the way a lot of you watch my videos but fail to subscribe for the channel your subscription matters for us your care towards us is expressed in the form of subscription if you are yet to subscribe for this Channel please do hit that subscribe button right now and press the Bell icon I give you two videos

every week every Tuesday an expert comes on the channel every Friday I speak my mind out on your life your money don't miss any of these value filled videos thank you very much for watching this episode on NR Clinic I shall be back with you next Friday with yet another thought of your life your money do share these videos with your friends and relatives near and dear ones and on all the WhatsApp groups on which you are connected with thank you very much stay safe till I see you next week press the Bell icon for

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