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What are the key challenges in reaching our financial goals

Inflation:

Inflation robs the purchasing power of the money. As time passes by, we would have to pay more to buy the same goods or services because of inflation. Let’s look at how inflation has impacted us in the last few years;

Cost of Movie ticket between 2004-05

Education Inflation

Health Care Costs Inflation

Over the last 35 years (1979 – 2014) the average inflation rate has been 7.5%. Keeping the same inflation rate in mind, an individual who is 30 years old, spending Rs. 30,000/- as monthly expenses would need Rs. 183,000/- per month when he turns 55 years old to maintain the same standard of living as of today.

Unless, one plans well ahead for the financial goals, it will be very difficult to keep up with inflation.

Life Expectancy:

The average life expectancy in India has been increasing over years. Statistics released by the Union ministry of health and family welfare show that life expectancy in India has gone up considerably over the last decade. Experts attribute the rise in this decade compared to the previous decade to better immunization and nutrition, coupled with prevention and treatment of infectious diseases.

Life Expectancy

The innovations in the medical field are ensuring that the human race thirst for living longer is quenched. It’s safe to assume that our life expectancy is going up and we would be living longer than expected.

Increase in life expectancy could be a serious problem if one hasn’t planned for the 25-30 years without income post retirement. A long life could increase the burden of medical expenses, resulting in requirement for higher corpus for medical uncertainties.

As compared to our previous generation, our number of working years has shrunk and number of years after retirement has gone up due higher life expectancy.
Higher inflation and higher life expectancy, act as a double whammy for a generation that believes in living for today.

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