Recap to March 2020. A nation-wide lockdown was announced to handle the Covid-19 pandemic. The lockdown extended till May 2020. Two months of no economic activity in the country led to crores of people receiving reduced wages & salaries and for some no income at all. All of us had to draw money out of our savings. People withdrew portion of their employee provident fund to get through these difficult times. The Covid-19 pandemic brought forth the importance of financial independence.
Financial independence simply put is being in a position to pay one’s living expense for the rest of one’s life with one’s own money. Financial independence was always sought after but never before has it been so important or necessary as it is today. Lets understand why financial independence is important in today’s times.
Higher life expectancy
In year 2000, the average life expectancy in India was 62 years. In 2022, the average life expectancy in India is 70 years. The average retirement age in India is 60 years. With increasing life expectancy, we need to accumulate a corpus for our lives after retirement. The retirement funds (Employee Provident Fund, Pension) may not be sufficient for the remainder of our lives.
Healthcare Costs
Hospitalization costs and healthcare costs in general have been increasing over the past few years. The current annual rate of medical inflation is 15%. This means that if some medical treatment was costing Rs100 last year, that same treatment will cost Rs 115 this year!! We are all aware of how medical bills for major ailments such as heart surgery, cancer etc. can put entire families in financial crisis.
Illusion of job security
In the current times no job is permanently secure. No amount of education and experience can guarantee that one will have a job until the retirement age. With changing technology, many jobs may be at a risk of getting obsolete in the near future.
Greater Control of our Lives
By being financially independent we can have greater control on our lives in terms of monetary sufficiency. Financial independence can help us and our families sail smoothly through difficult times and the intensity of economic shocks would be manageable.
As India celebrates 75 years of Independence, let us resolve to achieve financial independence for ourselves and for our fellow Indians.
Image credits: Image by jcomp on Freepik
