Q&A: Vikas Sayamlal Jethwani

Vikas Sayamlal Jethwani knows that retirement planning is the last thing on the minds of young clients beginning their first jobs or starting their families. 

But considering the financial challenges ahead and the lifestyle they want to attain, he advocates that advisors must encourage these clients to think ahead.

How do you express the importance of early planning for retirement to your clients?

I tell my clients, “When a baby is born, when do you start feeding it? From day one.” So, when you get your first paycheck, that is when you should start planning for retirement. I know that, for the younger generation getting their first salary and paychecks, it is important for them to spend on gadgets and their dreams. But the right age for starting retirement planning is either when you get your first asset, your first liability or your first responsibility, like when you buy a house, buy a car or get married. Retirement planning should be treated as if you are feeding one additional family member for a lifetime. When you are 60, or the age you plan to retire, the role reverses and this person starts feeding you for the rest of your life.

Why is planning for early retirement more important today compared with a few years ago?

There are two concepts. One is early planning and the second is an early retirement. Today when I talk to my clients, they don’t want to work when they are 60. They want to retire early. This is the concept that has set in for the emerging rich. They want to enjoy their lives. So, I ask them, “Do you really understand what you mean by an early retirement? Are you financially ready for that? Are you doing enough for financial freedom?” I tell them how much more money they’ll need just to maintain the same lifestyle they have today. People retiring at 60 have 35 years of working life to build their corpus, but anyone who plans to retire early does not have the luxury to start late or save less, and their first investment plan must be a retirement plan. It means they should be saving 40% of their salary every month if they really want to build an early retirement.

How do you convince your clients that retirement insurance plans are better than other options like a fixed deposit?

I tell clients, “If something happens to you and you don’t reach your retirement age, are you confident your partner would invest the money and property you leave them prudently? If the answer is no, then why not instead buy a retirement plan and leave them with a solution rather than a problem?” Today’s retirement plan has attractive tax benefits, and if something happens to you and you do not reach the retirement age, protections can be built in to convert coverage into lifelong income for your spouse. If you do reach retirement age, you have benefits and income for your life and your spouse for their life. Investments in fixed deposits not only have risks associated with inflation, taxation and reduced interest rates, but the big threat of being liquidated. A savings plan or a fixed deposit probably won’t exist after 10 years if there is an asset to be bought or a liability like a car or a house to be paid for. Those plans usually are the first choice for covering the shortfalls that occur with key life milestones like a child’s education or marriage. So, it is better to build retirement with a plan that you don’t touch, and you keep on feeding it.