NO ONE SIZE CAN FIT ALL

Each investor is unique and a specific individual’s reality may be vastly different from archetypal cases. Therefore, we can’t club everyone together

-  NILANJAN DEY

The real strength of a formal retirement plan does not lie in its execution or in any of the transactional aspects it is commonly associated with. Its true power is derived from the fact that it allays our fears and gives us hope. A plan and the intention to implement it is something that keeps an active income-earner going even during the transient, but worrisome phases marked by dwindling savings and emergency draw-downs.

An average individual with a functional retirement plan finds it easier to identify solutions for problems that may range from market upheavals to temporary diversion of funds. So, let us zero in on three key aspects of a formal plan. It so happens—and this is curiously coincidental—that these may be collectively termed the ‘3As’. We are referring to Access, Administration and Adaptability. Let us briefly deal with each of these.

A retirement plan should at all times be fully accessible to the individual. Accessing a plan is akin to controlling one’s own resources, free from conditions, such as liens and other legal encumbrances. An investor can lose control if he/she is overburdened with debt or sundry liabilities. In such debilitating circumstances, the individual will be unable to direct the available resources in the desired manner or for optimal gains.

A lot, of course, will depend on the administration of the plan—the manner in which it is executed. Naturally, the individual will need to harness all assets, compound their returns, and minimise their risk. But at the same time, costs must be also monitored so that the net performance is not greatly impacted. An efficient retirement plan is one that is managed well in all respects.