Hyderabad: Generation Z (below 25 years) is expected to confront unforeseen and unpredictable challenges, the foremost of them being early retirement. Already, retirement age is dropping due to technological progress while life expectancy is going up due to medical progress. Gone are the days when they planned to work till 60 years of age and then to lead a happy retired life.
The youth of these ultra modern times are treading a diametrically opposite path. The present generation is bidding goodbye to their choice career jobs by 50 years age itself only to pursue their future later life to their heart's content and as per their whims and fancies. Obviously, the preferred retirement is being advanced by over 10 years.
At the same time, lots of challenges emerge as one takes early retirement. Thanks to medical advancements, the longevity of human beings has reached 80 years. How should one plan to live the next 30 years once they choose retirement from active work by 50 years?
On this pertinent issue, online brokerage platform Zerodha founder and CEO Nithin Kamath shared on twitter some precious pointers for Generation Z (below 25 years). What should one do to plan in advance for a hassle-free retirement in the 50 to 80 phase? In the past, fixed assets and long term investments in stock market helped in ensuring a smooth retired life. Those days are apparently gone now.
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He raised a valid question in his post, "What Gen Z & even millennials don't think about enough is that the retirement age is dropping fast due to technological progress & life expectancy going up due to medical progress. In 20 years, retirement could be at 50 & life expectancy at 80. How do you fund the 30 years?"
"If climate change doesn't kill us all, retirement crisis will probably be the biggest problem for most countries 25 years from now. Earlier generations got lucky with long-term real estate & equity bull markets that helped create a retirement corpus. Unlikely in the future," he said. What should Gen Z do to get uninterrupted financial freedom at any stage of life? Zerodha CEO gave the following pieces of advice.
"Stop getting triggered by everyone trying to lend & stop borrowing to buy things you don't need or depreciate in value. Start saving early. Diversify across FDs/G-Secs & SIPs of Index funds/ETFs. Stocks are probably still the best bet to beat inflation long term."
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"Get a comprehensive health insurance policy for yourself & everyone in the family. One health incident is enough to push most people into financial ruin or set them back many years financially. Jobs don't last forever, hence one policy outside of what is provided at work."
"If you have dependents, they should be covered if something happens to you. Buy a term policy with adequate cover. In the worst case, this money in a bank FD should cover their financial needs. But the biggest fix for most people is that they should stop taking loans!"
