| Image courtesy: caconnectindia.com |
People of Greece have voted against any more humiliating bailout
proposals.
Kudos to their decision! This may mean their exit from Eurozone and
longer struggle to get back on their feet as a debt free country. Next few days
are very important as they will decide the future of this debt ridden country.
Whatever may be the result, the sufferings of its people may not end soon.
In the midst of every crisis, from wars to financial
meltdown, are the People! It is always the common man who suffer. People loose
their means of livelihood, youngsters cannot find jobs and sick cannot get
enough medical treatment and when the crisis deepens, people leave their
motherland and their homes in search of better living conditions elsewhere. In
case of Greek Crisis, along with all of the above problems, there is one more
severe problem…Greeks are not allowed to withdraw their own cash beyond a
certain limit! We can only imagine their difficulties.
There have been several analysis of How and Why Greece has
landed in such a situation. Analysts say Tax evasion and corruption clubbed
with Greek Government’s people pleasing policies forced its government to
borrow money from other countries. One of such people pleasing policies is
their ‘Pension System’.
Greece has an envious Pension System! Anyone above 50 can
retire and be assured of getting pension from the government. People were
getting better deal after the retirement than if they have stayed at work. Consequently,
non-working population handsomely outnumbered working population. No one cared about
the source of funds for such policies until it hit them back! As long as it
benefitted everyone, no one was worried about the situation being illogical.
When something unnatural and illogical happens, shouldn’t we
raise eyebrows and question it? Unfortunately we accept it as a way of life as
long as it benefits us. It seems that we suffer from selective myopia and only
see immediate gains. Also we have short memories and always forget our lessons
(we forgot the lessons from Subprime crisis, where everyone was encouraged to live
beyond its means and buy houses which they could not afford).
If we look around, two things are happening which defy logic
to me. First is ‘The eagerness to achieve all material possessions as early as possible’
and second is ‘to retire early’! The question is: Is it the first one
triggering the second or is it the attraction of the second one inspiring the
first?
During the course of my Financial Planning practice, 4 out of
every 5 clients want both. Everyone wants to have more number of possessions
like cars, properties. They want to splurge on lifestyle enhancement. Also they
want to retire early to enjoy post retirement life and sometimes to do the
things they could not pursue because of work pressure.
In both the cases one word should catch our attention, it is…’Early’!
In Greece also, people wanted to enjoy life Early. Their Government supported
them. But this may not be the case with a lot of us. Our governments may not be
able and willing to support us so we will have to fulfill our wishes with our
own hard work. Which means we have to speed up the process of earning, means
longer hours of work or looking for risky investment options which can give us
higher than ordinary returns. In nutshell we need more money that too quickly to
fund our increasing wish list quickly.
There is nothing inappropriate in enjoying and splurging in
life as long as we are able to do it within our means, which means our physical
and mental means! But it is an unnatural desire if it is forcing a person to
work beyond its capacity and there by leading him/her to emotional and physical
health crisis (every other person complains of being stressed and fatigued).
Similarly there is nothing sinful in hoping to retire early
and relax. But we must remember that early retirement means more number of non-working
years. It means that after retirement we will be living off on income we generated
during our working years. For example, If a person’s working life starts at 24
and he decides to retire at 54 and he is alive till 94 (enhanced life
expectancy world-wide) then he is earning for 30 years to feed himself for 70
years! Also in those 30 years he will go through several major landmark of
life cycle as well like marriage, kids, settlement of kids, aging parents,
living a lifestyle they always dream of along with professional up and downs. We
can well imagine the pressure we are unknowingly putting on us.
Greece enjoyed too much too early, their system collapsed.
Likewise if we wish to enjoy too much too early, our emotional, physical and financial system may collapse!
The only answer is ‘Take it easy’!
