Give your retirement a priority
Written on Tuesday, November 24, 2015
By Sunil Dhawan
Most of us push back the very thought of retirement and give it the least preference in one’s scheme of things in life. A retirement survey shows nearly 78 percent of Indians haven’t planned their retirement. But then, ignore it at your own peril. With increasing life expectancy and rising cost of living, can you expect to maintain the same lifestyle you are used to now, leave aside enhancing it? Act now, before its too late. Sit down and design your retired years with lots of traveling, spending, and relaxing in mountains and beaches, all through your retired years. You should plan in a way that you are never short of funds even during the retired years and certainly not dependent on anyone including your children.
Start Early, Start Now
And to achieve that comfortably, you need money. If you are one of those who haven’t started saving towards retirement, planning it is simple especially if you start early. The earlier one begins to save for retirement, the lesser is what is required. See, how Radhika had to save considerably less than others to create same corpus in “Starting Early: Compounding at its Best”.
Small Start to Big Corpus
Small amounts, if invested wisely and with discipline, could end up as a healthy sum when you retire. There are fund houses with schemes that ask for as low as Rs. 500 to start with. Start now, as it helps building a financial discipline. Start with a smaller amount and over time when income rises, increase your savings. Saving a few thousand rupees every month doesn’t require much of an effort, so devise a plan and stick to it. Putting aside 10 per cent of take-home cheque in a retirement basket shouldn’t hurt. It’s seen that launching a retirement program when you are 55 is 18 times more expensive than when you are 25.
Even if you are starting late, you probably need to re-look the magic of compounding. Simply put, under compounding, your savings would multiply exponentially as interest earns interest over long term. If you start investing early, the time you give your earnings to earn further is more.
Once you decide to make regular investments towards your retirement plan, be sure to exploit the full potential of equities as it has delivered the most among all asset classes in the past. Equity mutual funds have proved to be the ideal vehicle for retail investors to take advantage of the excellent long-term growth of stock markets.
Many of us procrastinate and do not give importance to retirement until they are 40 plus. They have a misplaced confidence that they could manage from a late start. Their perception is that a little extra amount of savings would be enough. The reality is, starting late could make you invest more than double than someone starting early. More the number of years to retirement, more is the boost to your retirement corpus!