Tuesday 5 October 2010
Can you afford to live till 99???
Take a look at this article that talks about the real implications of low interest rates, especially for thrifty savers:
We, in India, are nowhere near this kind of situation. However, we are moving in that direction. Our interest rates, in the long run, are bound to be aligned with global rates. I distinctly remember getting fixed deposit interest at rates upwards of 11-12% per annum in the 80's & 90's. We've already reached 6-7% levels, and are sure to go down further in the years to come.
And, the average age till which we will live has already gone well past 75 for the middle class and upper middle class. Éven the poor and lower middle class people have started living till 70.
Inflation is far higher than the official government figures. Just check out the prices that you paid for various items like tooth paste, biscuits, dal, oils, petrol, shaving cream, medicines, restaurant dinners, movie tickets, auto fares, etc. just a year back and compare the same with current prices.
To top it off, most of us do not have a good enough pension plan.
The combination of low interest rates, high inflation, increased longevity, nuclear families, and absence of high quality social security systems can be killing.
Awareness is the first step and a key pre-requisite to actual preparedness to face the situation depicted above.