Why IT Professionals need a Retirement Plan!

Why IT Professionals need a Retirement Plan!


Without doubt, IT professionals are one of the highest paid professionals today. The year 2000 witnessed an IT boom that literally showered lucrative and progressive career opportunities on thousands of young people. Even though the recent financial slowdown in the US and Europe are not quite encouraging for the IT industry, it still remains one of the highest paid industries, but unfortunately with some hitches.

Changing Financial Scenario

The European and American economies are evolving fast and directly affecting the IT industry, as many of the clients come from these countries. The IT industry is no longer experiencing the cake-walk as income hikes are restricted to 8 to 10 % and with growing inflation rates, directly 30% of your pay hike would be gone as income tax. Therefore, the pay hikes don’t make huge difference. There is no real return, no actual growth due to inflation, ever-rising commodity prices and inflated life-style.

Inflation Augmented By Life Style Inflation

A drastic change can be seen in today’s lifestyle. High spending on get-togethers, parties, malls, picnics and trips to exotic places have become an integral part of an IT professional’s lifestyle. It is no longer a luxury, but has become a necessity of life. Today, Life style inflation is higher than normal inflation, making an accustomed life-style maintenance more and more difficult.

Let’s take an example – Today when Sanjay goes for a movie with his family and pays somewhere between Rs. 200-300 per ticket and around 500 on food and parking it brings the spending on a movie to almost 2000. A decade ago, he had not imagined himself spending so much for a movie. Sounds familiar, doesn’t it?

Evolving Life-Style

To some extent, this changed lifestyle is the outcome of two things; high salaries and a need of overly-stressed IT person to relax and enjoy for a while. After spending minimum 9-10 hours at work, nearly 2 hours daily at travel, working late for deadlines, adjusting to difference in time in India and other countries, staying away from families for on-site assignments affects one’s health, peace of mind and family-life. Rise in life-style diseases like diabetes, hypertension, heart-trouble and obesity can also be attributed to the growing stress-level among individuals.

With All This Will An IT Professional Be Able To Complete The Normal Age Of Retirement?

Pre-Retirement Assumptions

All these factors compel the IT professionals to think about early retirement. Their higher salaries also make them believe that the future will be safe and secure. Unfortunately, most of the IT professionals fail to understand the ever-escalating cost of life. Retiring even five years early will have immense financial impact. No doubt, a person can retire earlier if he/she desires so, but the key for a successful early retirement lies in taking correct financial decisions based on well-planned strategies.

If you are looking at earlier generations and wondering how they are spending peaceful retired life. Don’t forget about their simpler life-style and secure jobs that give them pension till today. Nuclear families have become an inevitable part of our society. Today’s working generation is looking after their elders, but it would become difficult with your kids. The competition, the efforts and fight for better life and stress levels would be more for future generation and you would not like to add to that by depending on them. Any person would like to be financially independent and would try to make the arrangements for a better and secured future. This care for financial future can be taken through proper Retirement Planning.

Information Vs Knowledge

Many IT professionals do financial investments in real estate, stock markets and so on; however, most of their investments are based upon information gathered through unauthenticated and biased sources. There is a large difference between information and knowledge.

Ramesh was one of those who believed that he is an expert on stock market.

He invested huge money in stock market by tips given from different portals and by reading business newspapers and now, with the stock market fall he finds himself in a difficult position.

We need to understand that how writing a code or working on a specific technology is a specialized skill, so is managing your personal financial life. So don’t hesitate to take professional help. (www.nirajnanal.com)

No Structured Retirement Planning

On an average, a person’s peak career starts from 30 years of age and lasts till 50 years of age. In this span of 20 years, you earn for your retirement years also. The average life-expectancy is considered 80 years. So, effectively within the age of 30 to 50 i.e. 20 years; the person actually is expected to plan for next 30 years of retirement too. What can make your retirement life peaceful and easy?

If you are looking for an early retirement then having a structured retirement plan becomes imperative. Most of the IT professionals ‘Fail to Plan’ leading to a ‘Plan to Fail’. Even though they are the experts of their domain, they may not have the required expertise for good financial planning.

Lack of knowledge, use of unreliable information sources, advice from biased sources like product salesmen and reluctance for paid and certified financial advice culminates into wrong financial decisions which may hamper your early retirement plan.

Get Financial Education and create a Plan for Retirement!

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