Category: Retirement Planning

What is the health corpus needed at Retirement

"Determining the Essential Health Fund for Retirement"

Meta Description: "Discover the growing importance of health, the rising healthcare costs, and the necessity of a health fund in retirement planning. Gain insights into addressing future healthcare expenses."

In the face of adversity, such as illness, one learns to appreciate the value of good health, as expressed in the Catalan proverb, "From the bitterness of disease man learns the sweetness of health."

Health has become a topic of paramount concern and interest for all individuals. The concept of wellness has burgeoned into a thriving industry, with many young people embracing balanced diets and regular exercise, shunning sedentary lifestyles. A healthy body is no longer a matter of following fashion trends or seeking fame; it has evolved into a way of life. The younger generation exhibits a growing awareness of the shift from a 'couch potato' lifestyle to adopting 'millet-friendly organic food' as a part of their daily lives.

In India, the wellness industry was valued at around Rs 85,000 crore in the financial year 2014-15, and it is expected to experience a compounded annual growth rate (CAGR) of approximately 12% over the next five years. According to the report "Value Added Service – Wellness and Preventive Healthcare," wellness is anticipated to be a significant driver for health insurance in India.

Over the past 25 years, India has undergone a substantial epidemiological transition. The focus has shifted from communicable diseases to non-communicable diseases (NCDs). This transition has been primarily driven by changes in economic conditions, leading to an adoption of unhealthy lifestyles. In response to this shift, the government has identified various priorities in the National Health Policy, including initiatives like the Swachh Bharat Abhiyan, promoting balanced diets and regular exercise, combating issues related to tobacco, alcohol, and substance abuse, enhancing safety in rail and road travel, addressing gender violence, reducing workplace stress, and mitigating indoor and outdoor air pollution.

The rising prevalence of NCDs has led to a significant financial burden, with individuals having to allocate substantial funds for diagnosis and treatment. The escalating cost of medical care has prompted contemplation of the need to create a health fund for the future.

Recent findings from a cross-national health survey conducted by the National Sample Survey Office (NSSO) in the first half of 2014 indicate that healthcare costs have grown at a double-digit rate, surpassing average inflation rates in both rural and urban India.

With an assumed minimum annual growth rate of 8% over ten and twenty years, we have projected the costs for 2027 and 2037 for healthcare expenses not typically covered by standard health insurance plans. These include expenses related to dental implants, ceramic crowns, root canal treatments, glaucoma, and comprehensive health check-ups.

To prepare for unforeseen medical expenses during retirement, individuals can contemplate investing modest amounts, such as Rs 5,000 per month, at an annual rate of return of 12% over ten or twenty years. For instance, after a decade, the fund would accumulate to Rs 11,50,193, while after two decades, it would grow to Rs 49,46,276. These figures apply to individual investments, and for families of three or four, the necessary corpus would naturally increase.

Although it may be tempting to indulge in luxury items with a fresh paycheck, maintaining a well-thought-out financial plan to address healthcare expenses during retirement is a prudent decision that will never go out of style.

Sneha Ramamurthy Content Writer at Dilzer Consultants Pvt Ltd