The runway for an engineer pursuing an IT career is 15 to 20 years. It is wise to accept this reality and adjust your personal financial decisions accordingly.Sakthi Kumar
If you are a salaried employee in a high-tech company and you are dreaming of retiring by the age 58, I'm very sorry to wake you up and say that you should plan to retire by the age of 45.
Here are the top 5 reasons why you should stop day-dreaming, accept the reality and plan to retire by 45.
Many jobs across the world are getting automated or being replaced by computers, robots, and machines. Many corporate companies, especially MNC's in India, are laying off employees of this age group, not just in India but across the world.
By the time you reach 45, your skills will become obsolete because of the rapid evolution in technology and of the business models around the world.
Many job roles that had existed for several decades or even centuries were eliminated during the DotCom Boom in the 1990's. Now that trend has gained more momentum in the last few years.
Many IT jobs that were created just in the last 10 or 20 years, are being eliminated now because of the heavy automation focussed trend in the IT industry.
Many IT companies don't want to hire an engineer to do a job that can be done more efficiently and effectively by an automation software, even if the software costs more money.
For example, many Indian IT services companies used to hire a lot of engineers as software analysts, train them, get them a L1 or H1B visa and put them in many Wall Street financial firms, to simply provide customer support for various financial or banking applications that run in those banks' servers.
With the advent of cloud technologies, no body cares about a server or an application going down. If one goes down, the cloud controller software that keeps an eye on all the servers or applications running in the cloud, will automatically spawn a new instance. The end user will not even know the impact.
The same applies to the customer support roles where the smart chatbots handle the customers first before redirecting them to the real humans who'll take a stab at the customer problem.
Almost all IT operations and customer support roles are getting automated now. IT Admins have to become devops guys ( they should learn a few programming languages) if not, they'll lose their jobs soon.
With Agile development methodologies in devops and everywhere, software releases happen every week and not once in 3 months or six months.
The skills of the past are no longer relevant today and the same trend will continue in the future.
If you have more than 20 years of experience in any domain or technology, the chances are that your salary will be already too high compared to other young professional working in your company.
Moreover, with that level of experience you start demanding more salary and frequent promotions, which most companies cannot afford.
Your employer could easily replace you with 3 young workers who demand less than one third of your salary.
So, the more salary you earn, the higher the risk of being laid-off.
After spending more than 20 years in the same job and same domain, you become lazy to learn new skills. You resist change in all forms.
You keep complaining about every simple change that happens in your workplace, including upgrading to a mac book from your old windows laptop.
The market and industry in which your company is doing business is changing quiet rapidly. So for its survival, the company makes frequent changes within the organization.
Today's organizations look for agile workers to remain innovative and cost-effective. At 45, if you are not agile, flexible and hard-working, you become a liability to the company.
You'll eventually be either laid-off in the next performance appraisal cycle or when your boss finds a right opportunity to eliminate you.
Today, more and more people are developing health risks much earlier in their life.
This is primarily because of the unhealthy lifestyle changes happening in the society such as working very late in the night, personal and job-related stress, frequently eating junk unhealthy food, consumption of alcohol, smoking and lack of physical activity.
Many people in the IT industry have learnt these unhealthy habits only after they started earning a huge-pay check. Somehow they started to believe that their promotion, salary and hike will be perennial and perpetual. This false perception makes them to spend their hard earned money in ways that the previous generation of workers(our beloved parents) never imagined to do.
Today, many develop heart diseases in their 30's. By the time many reach 45, they develop some health condition like obesity, diabetes, high blood pressure etc.
If you don't plan to retire by 45, but instead aim for 58 or 60, then you might start taking financial risks that could potentially tread you down into a chasm. For instance, you may be taking a 2 Crore or 3 Crore 20 year home loan at the age of 40, which you or may not be able to repay by the time you reach even 50. What if you got laid off from your job in your 45 or even 50 ? How will you repay the loan ? How will you manage your personal finance?
You'll most likely be investing(perhaps I should say, betting) a significant sum of your savings in risky stocks(so called growth stocks) in the stock market.
You'll be lending a disproportionate amount from your savings to your relatives and friends, who already struggle financially and have no possible means of income to repay your loan.
I have seen many of my colleagues and their friends losing their jobs around 40 years of age, with a huge monthly EMI to pay for the next 15 years. They are still struggling to find a job that pays them a reasonable salary.
Therefore, my beloved readers, if you are a salaried employee in a high-tech company, it is prudent to financially, mentally and physically plan to retire by the age of 45.
Plan, so that your investment attitude in your late 30's isn't like the one in your early 20's. Your investment runway, in your late 30's, is very short.
Financially, buckle up when you are nearing 40, so that you'll plan for a safe landing. If not, it will be a free-fall one unlucky day.
However, if everything goes well, you get lucky and you retire in your sweet 60(which will be a very very uncommon phenomenon in the years ahead), and not in your 40's as you had originally planned for, you'll still be in a better position and wouldn't have lost anything big.
You would have earned more money, avoided unnecessary expenses and made "safe" investment choices towards your retirement, which is the right thing to do, as you grow old.
So take a pencil and a notebook, find a quiet place and start planning for your retirement by 45, now!
Here are some ideas:
#1. Identify alternate means to generate passive income before you retire by 45.
#2. Start your own business or develop your family business.
#3. Contribute back to the society that made you who you are today.
#4. Travel around the world, go visit new places when you are young and able.
#5. Go back to your home town and live a life you always dreamt of living.
There are so many ways to earn money online today in India compared to what it was 10 years back. All you need is a laptop, internet connection, the motivation to work and some basic knowledge.
Disclaimer: What I have mentioned in this article mostly holds good for salaried employees in the high-tech industries and it may or may not apply to salaried employees in other industries.
This article originally appeared in www.creditdeals.in