Sudhakar, a former middle level executive who never had any retirement planning in place is just another example of how people like to gamble with their lives post retirement. Despite having a decent take home salary, he never really saved for his retirement. At the peak of his career, he had been earning as much as Rs 4,00,000 a year but never bothered to save a single rupee for his retirement. All his earnings were spent on home loans, car loans, children’s education and marriage. As a result, today he has to depend on his two children for even day to day expenses.
Just like Sudhakar, there are millions of Indians out there today, who feel retirement is far away and postpone or fail to plan for their retirement.
Let us understand why it makes sense to plan for retirement
1. Increased life expectancy: With access to better medical facilities and living conditions the average age of life expectancy has gone up beyond 75. Hence you need enough funds to take care of your needs as long as you are alive.
2. Inflation: With increase in inflation, the cost of living also goes up. Hence you need to keep inflation in mind while building up your retirement fund.
3. Health problems: With increasing age, health problems are also likely to increase. Hence it makes sense to have adequate financial provision which will take care of any medical treatments for health problems.Now let’s understand why it is best to start retirement planning as early as possible.
By starting early for retirement, you have more number of years in hand to save. Hence you can build a huge corpus which will help you to lead a comfortable life post-retirement. Also by starting early you can get the advantage of compounding.
“Compound interest is the eighth wonder of the world. He who understands it, earns it ... he who doesn't ... pays it.”….. Albert Einstein.
Over the period of years the amount of compounding interest earned on your investment can help you to maximize your retirement fund.
Another advantage of starting an early retirement is that after a certain number of years, you can stop investing. The money already invested by you will keep increasing due to interest income getting added to it.
If you still have not planned for your retirement, it is just the right time to get in touch with your financial consultant and start retirement planning. Remember earlier the better.
