So you are young and ambitious? Retirement is years away? Nows the time to focus on living the day! PPF or EPF or FDs will take care of retirement? If any of these things sound familiar, its because…well they are! People in their 30s or 40s seldom think of retirement corpus building as theres too much going on but then they forget that that’s exactly when they should begin planning – a smaller amount saved aside each month at a larger potential return, ideally via SIPs, is exactly what will help them reach their retirement goals!
Start Early to Retire Peacefully
Retirement planning is often seen as an old man’s work – which is exactly the opposite of whats actually required. It’s the younger people who have the opportunity to save smaller amounts for lets say a 20 year period in equities – smaller because they have other commitments, time because they are young and also equities work best in the long run!
Imagine the number of celebrities who faded away from the limelight because they were too busy earning and spending – and forgot what life may be like when they are forced into retirement by circumstances. The existing corpus was simply eaten away by that nasty beast called inflation and by the time they realized they had to reduce expenses (which psychologically is very depressing) it was too late!
Also another reason you should start early is because it forces discipline. Loans, EMIS, that international holiday, that 60 inch TV – will all consume your savings before you know it. That’s why it takes courage to put aside an amount each month as an SIP – no matter how small, but start! Your retirement should then ideally be taken care of by that magical thing called power of compounding! In addition, equities (mutual funds or straight stocks) SIPs are a great way to also benefit from the tax regime as long term taxes are low.
Life also throws surprises. If you start planning early, you can be ready to face any emergency. You will have time to save for an emergency fund to fall back. Which ideally should be separate from you retirement corpus.
There are many ways to save for retirement including SIPs in Equities, SIPs in Mutual Funds , ULIPs, Pension Plans with Deferred Annuities, PF , PPF etc but if time is on your side, the best way is to do it via index funds!
Work It Out Yourself!
At times, its easier to experience post retirement situations by working through problems yourself. At the end of the day, how much you will spend post retirement will depend on how much you save today.
We have attached a very simple excel sheet called the Retirement Planner in this blog – we encourage you to download this yourself and experience the situation you might face if not saving enough and the situation if you start late. If you patiently spend 15 minutes on this excel, your situation would become clear!
Click the link to download the simple file : Retirement Planning
Remember – this sheet assumes you are not leaving behind anything for kids nor other goals are included here. In case you already have a corpus in place, reduce the amount from the Corpus Required at retirement to calculate the net needed investing value.
This is a plain and simple sheet that allows you to get basic numbers right so your savings are fully exhausted on the day you choose! Not a day more!
If the sheet helped you understand even a little bit of what the realistic situation is likely to be, our job is almost done! Contacting our relationship managers to actually execute this saving and investing plan via the many many options we offer is then upto you!
Remember – you may delay decisions, but time and inflation wont! Start today!
Connect with us at email@example.com if you wish to set up an SIP or contact your relationship manager today!