Forget retirement planning. Financial planning in pandemic times is so wobbly, that one prefers to go with the flow, and procrastinate of decisions.
However, decisions are to be taken and quick – decisions about life, lifestyles and financial goals.
IMMEDIATE DECISIONS – MONEY OR LIFESTYLE?
1. Do I want to go back to office, or continue with the work-from-home or work-from-hometown lifestyle?
2. Is it possible to take a cut in income by freelancing or taking up something less demanding than the corporate assignment, and yet meet the reduced cost of living?
3. When am I taking the next holiday, or at least get to the the nearest multiplex or mall?
We have led a compressed and sub-normal existence for almost two years.
HOW DOES FLEXI-WORK IMPACT LIFESTYLES AND RETIREMENT PLANS?
1. Sunaina says she wished the lockdown would go on indefinitely. She has sufficient time to keep an eye on her kids, and manage work. It is not always that you can work at midnight, after putting the babies to bed, and wake up late next morning?
Flexibility acquires a new meaning.
However, things come to a head when she is asked to get back to office. She chooses to quit, as the domestic help is not in place, and sending the kids to a creche feels unsafe.
Household budgets and EMI schedules need to be reworked.
She may eventually get back to regular work, but the economics has changed.
2. Dora and Albert are on the wrong side of 50. Their old parents live with them, and a daughter-in-law is pregnant. Caregiving responsibilities mean that one of them has to stay at home.
Dora is doing well in her career and earns more than Albert. They decide that she will continue with her job, while Albert quits and takes up consulting assignments, which give him more flexibility.
Since they are close to retirement age, the financial plans need to be revisited. They make a quick appointment with their financial planner, before arriving at a final decision.
3. Aarushi has moved back to her home town. She likes being near the mountains, take her weekend ski-ing trips and continue to work from home from Monday to Friday. There is a small salary cut, but it is more than compensated for, by the reduced cost of living.
DOES THE POST COVID WORK SCENARIO EXCITE OR DEPRESS YOU, WHEN YOU THINK RETIREMENT PLANNING?
Wait a minute…
Pull out your calculator or open MS Excel and allocate a monetary value to how life has changed.
1. How much money have you saved in the last year?
2. Have you managed to prepay some loans, or are you lagging behind in EMIs?
3. Is your company changing compensation policies to accommodate the new flexible work models?
4. Have you suffered a loss of income due to salary cuts, or a family member quitting a job?
5. Do you need a bigger house to accommodate schools and office? How much will that cost?
6. Are you saving a large amount on creche or baby-sitting services?
7. How much will you save on commuting cost?
8. What is the extra amount to be allocated to healthcare?
Writing the pros and cons on an Excel sheet, will give you an idea of the monthly surplus or deficit.
Move beyond this.
How many years do you still have before retirement, to build a comfortable kitty?
HOW DO PRESENT CHANGES AFFECT FUTURE FINANCIAL GOALS?
Projections based on past history do not make the best budgets or financial plans. But it may be the only tool available, if the future is unpredictable.
All that one can do is incorporate a Plan B and Plan C in your worksheets and mindsets.
It helps to be mentally prepared, if you are not financially prepared.
Rigidity has gone for a toss.
We need to be on our toes, ready to grab opportunities.
We also need to be on a back foot, ready to cut costs when needed.
The only constant is change, has never been truer than in present times.
Mindset matters. Flexibility matters more in money mindsets.
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