An easier said than done fact is to plan for your retirement before you actually retire. Do you know when it’s the right time to retire? Maybe at sixty- sixty-five? Whatever the age might be, one should start planning early enough to have a secured future after you get retired. People don’t find it practically sound to plan for retirement because they have responsibilities to meet like their kids, living expenses, mortgages etc. It’s difficult to pull off something like this with children to raise.
Well, whether it’s difficult or not, you should plan for it during your 30s because that would be your saviour when you turn old.
The best time to start planning for retirement is the day you receive your first paycheck.
This is how you can start off your planning in the 30s and become financially independent in future.
Have you ever thought of how your money gets multiplied over years if you start investing early in your 20s or 30s? And one of the most valuable things you have in your 30s is time. Time can earn you loads of money until you turn 60. It is far easier to grow money over 35 years than over 20.
| Age | 25 | 40 |
| No. of Years | 35 | 20 |
| Amt. Invested | 10,000 | 25,000 |
| Return | ₹6.43 crore | ₹2.47 crore |
| Difference Amt. | ₹3,95,78,210 |
See it’s right in front of you that if you start early at 25 with a lesser amount as compared to the amount that you start off with at 40 will give you almost 4 lakh rupees more every year if you compound it @ 12% per annum.
This amount is a significant addition to your secured future and a better life at the age of 60. Isn’t it? Definitely, yes if you think wisely and have your money invested in mutual funds.
You’d be blown to know compounding’s effect once you understand how it works. To understand it better, we have an example, and here it goes.
| Age | 30 | 35 |
| No. of years | 30 | 25 |
| Amt. Invested | ₹10,000.00 | 10,000 |
| Return | ₹41,74,186.98 | ₹33,89,183.94 |
| Difference Amt. | ₹7.85 Lakh |
This table above shows if you start investing in say mutual funds with Rs. 10,000 at the age of 30 and your friend also starts with the same amount but at the age of 35 compounding @ 12% per annum, then at the age of 60, you will have almost 8 lakh rupees more than your friend at 60.
Does it make sense to delay your investment when you know how huge the difference is and how much money can you make if you start early?
This is a simple key to saving money. It’s a crucial habit to learn when you’re young that will follow throughout your adulthood is how you live below your means.
Your goal should be to save and invest more rather than being a spendthrift.
Say, for instance, you can live only on 85% of your income and save the rest 15%.
Digital apps will help you manage your expenditure and income. Keeping track of how much money is coming in and out of your pocket will help you make smarter financial decisions.
Credit card bills, car loans, home loans are a burden and cluttering them would be unhealthy for your financial condition when you retire. Because of high-interest rates, developing a habit of stacking up debt when you’re young will only hurt you more when you get older. Ideally, one should not purchase things if he cannot afford it, but we live in a materialistic world where it’s impossible to avoid this. Hence, if you do have debt for a major purchase, have a formal plan to get out of it.
One way to do this is to cut your costs where you think you can like cancelling the gym membership you keep telling yourself you’ll use or opting to make your lunch or dinner at home.
So, if you’re not sure of when to start planning for retirement, you better start planning during your 20s and 30s because the one thing you can’t make more of is ‘time’ and the moment you can’t borrow for is ‘retirement’.
So, start early and have a safe journey ahead.
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