I want to Start Planning my Retirement Early.
Retirement Plan
Most of us like to live in the present, so much so that often, we end up ignoring the future. We splurge on present needs and retirement planning to most of us is something esoteric that is best relegated to financial planning magazines.
To be sure, saving and planning for retirement is a real and urgent need; it’s a lot more urgent than the latest mobile or car or the grand vacation to Europe.And retirement planning is too pressing and long-drawn to be taken up when you are a just a few years away from retirement; by then it’s probably a little too late in the day to wake up to the rigors of retirement planning. At Wealthhunter, our recommendation to clients is to save for retirement at an earlier stage of their lives.
This helps in two ways
It reduces pressure on finances at a later stage and it enables one to aim for an ideal retirement scenario and not a compromise.
⇒ Here we outline some myths about retirement planning:
Myth 1: Retirement planning needs to start when I turn 40.The power of compounding may be a cliched concept but it is true and relevant. The younger you are, the better are the prospects of building a large corpus for sunset years since you can reap the most out of the power of compounding.Your money starts earning interest and the interest earned also starts earning interest, translating to a decent size nest egg.For example, let’s assume that you are 25, and save Rs 24,000 a year (Rs 2,000 a month) for 10 years, that is till you are 35. After that age, you stop saving and just let the kitty grow. When you turn 60, at 8 per cent compounded return, your retirement corpus will be a cool Rs 30 lakh (Rs 3 million).If on the other hand, you are 35 and want to amass a Rs 30 lakh kitty when you turn 60, you will have to save Rs 48,000 a year (Rs 4,000 pm) for 15 years, at 8 percent.
Inference: If you start saving at an older age, not only do you have to save much more every month but also for a much longer duration to collect a similar corpus.
