You might be thinking that retirement is ages away and that you can wait for a few more years before preparing for it. After all, there are so many other things to focus on, like your career, family, current finances, and social life. But did you know that the earlier you start planning for your retirement, the more prepared you will be when the time comes?
Planning for retirement is not just about saving money. It’s about making sure that you are financially secure in your golden years. This means thinking about what amount you will need to live on, what sources of income you will have, and what kind of lifestyle you want to have. So, even if you are years or decades away from retirement, the actions you take today will decide the lifestyle you have in the future. Read on to learn more reasons why starting retirement planning today is important for your financial security.
- Time is on your side
When you start early, you can take advantage of compound interest. Compounding occurs when interest earned from your investments is reinvested to generate even more earnings.
By starting early, your investments have more time to grow, and you will be able to create a huge corpus over the years. For example, let’s say you start an investment in mutual funds with Rs. 10,000 each month at the age of 35. Assuming an 8% return rate, by the time you retire at 65, your savings would be approximately Rs. Rs. 1.5 crores. But, if you start investing the same amount at 45, your corpus would only be Rs. 58.9 lakhs.
- More flexibility
Starting early also gives you more flexibility with your retirement plans. You will have more time to adjust your plan as per your changing financial goals and priorities.
For example, when you have enough time, you can select growth-focused schemes, equity mutual funds, or more aggressive investments and take more risks to earn higher returns. Later, as you approach retirement, you can adjust your plan and invest in more conservative strategies that offer lower risks but more stable returns.
- Unpredictable future
No matter how well you plan, life is unpredictable. Medical emergencies, job loss, family responsibilities, and other circumstances can affect your current financial plan and retirement savings. So, the earlier you start planning, the better prepared you will be to handle such emergencies and still meet your retirement goals without compromising your present lifestyle.
- The power of inflation
Inflation can silently affect your retirement savings. Over time, the value of money decreases, which means that whatever you save or invest today may not have the same purchasing power when you retire.
Starting retirement planning today can give you enough time to invest in mutual funds and other schemes in a strategic manner. By having a balanced portfolio of stocks, bonds, commodities, and other investments, you can ensure that your retirement corpus is protected against inflation.
- Healthcare expenses are rising
As you age, healthcare needs increase, and so does the cost. This means that by the time you retire, medical expenses can cost you a major portion of your retirement corpus. To maintain a good lifestyle post retirement, choose the right health insurance policies for yourself and your family. This can help you manage unexpected medical expenses without taking too big a portion of your retirement corpus.
Also, as new treatments become available with time, review and update your policies to make sure they still fit your needs.
To wrap up
Remember, your retirement planning is about creating a lifestyle that meets your needs, values, and goals. You would want to enjoy those golden years without the stress of financial concerns, and the only way to achieve that is by taking steps today. Take some time to create a solid retirement plan that includes a budget, savings, debt management, well researched investments, and insurance so that your golden years are filled with relaxation, enjoyment, and most importantly, financial security.