LinkedIn influencer CA Kanan Bahl contends that the traditional retirement age of 60 is outdated, advocating instead that 45 now represents the new norm.
In a recent LinkedIn post, Chartered Accountant and influencer Kanan Bahl has offered financial advice for individuals looking to secure their future in a rapidly evolving job market. Bahl's strategies focus on early retirement planning, aggressive saving, and smart investing, given the uncertainties and potential disruptions that technological advancements may bring.
One of Bahl's key suggestions is to plan as if income may cease by the age of 45, not 60, a concept he refers to as "45 being the new 60." This idea is based on the possibility that rapid technological changes could lead to job disruptions, making it difficult for some to continue working past the age of 45.
Another crucial aspect of Bahl's approach is the emphasis on saving aggressively and investing wisely. Given the uncertain job market, he stresses the importance of building a robust retirement corpus early on. To achieve this, he advises controlling lifestyle costs and avoiding unnecessary expenses, particularly those that contribute to lifestyle inflation, a trend he notes is prevalent among Gen Z.
Bahl also recommends leveraging government-run retirement products like the Employees' Provident Fund (EPF) and the National Pension System (NPS). He considers these instruments as "perfect for spendthrifts" due to their long lock-in periods, which enforce saving discipline and prevent impulsive spending. However, the specific details about the EPF interest rate for FY 2024-25 were not provided in the article.
The EPFO has recently increased the auto settlement limit for PF withdrawals by 5 times, but the new limit and details were not disclosed in the article. Withdrawals from the NPS are restricted, with 40% of the corpus accessible only after death. Both EPF and NPS offer tax benefits under the new regime.
Bahl also addresses the issue of adapting to technological changes in the job market. While some jobs will grow with AI and automation, he questions the assumption that everyone will be able to adapt. This uncertainty strengthens the need for a conservative, disciplined retirement plan.
In summary, Bahl's approach for retirement planning in a fast-evolving job market is to expect early career disruptions, curb expenses, save and invest aggressively, and rely on disciplined, long-term financial products to secure financial stability by mid-life. His advice serves as a reminder for individuals to take control of their financial futures and plan for the uncertainties that technological advancements may bring.
- In the unpredictable job market, DeFi (Decentralized Finance) could potentially provide alternatives for securing liquidity and protecting personal-finance against inflation, as it offers different investment opportunities and can be accessed 24/7 online.
- As Kanan Bahl points out, the current trend of lifestyle inflation among Gen Z could be detrimental to early retirement planning in the face of market uncertainties. Hence, it is crucial to focus on smart finance habits and avoid spending on non-essential items.
- While the traditional finance world caters to long-term retirement products like the Employees' Provident Fund (EPF) and National Pension System (NPS), it's essential to stay informed about their terms, interest rates, and changes such as the recent increase in the auto settlement limit for PF withdrawals, to make the most of these investment tools.
