When it comes to our life, we ask a lot of questions. Particularly, when we think about our retirement, the first question we as is “When should I start planning for retirement?”
If you are looking for the obvious answer, then you have to be ready to accept the truth. I do not say you have to believe blindly. If you want you can consult other retirees or financial advisors until you get the obvious answer.
The obvious answer to the obvious question. Now, for the obvious answer to the question is “as soon as you get your first job”.
You get your first job in your early twenties. Don’t forget it is the beginning of your life. You may think, you can start your retirement planning in the thirties, but at that time you will get married and maybe you will have a child. Then, you have to focus on your family, child’s education, your child’s marriage, and purchasing your dream home, etc. You can’t even think about future.
Change is unchanged: Early retirement
‘Change is unchanged’ is a universal truth. We are making a change, and the change is showing an effect on us. We are moving towards the change. Now, the trend of our generation is ‘Early retirement’. Nothing will hold us too long. The previous generation is known to work hard. They lived well-planned life. We are known to work smart.
Nowadays, science and technologies are proving that humans can live longer than expected. So, we are expected to live more than what we have expected after our retirement. Do you really think 5 or 10 years of savings will be enough after your retirement, especially when you won’t get your regular salary?
During this fast-paced life, we don’t have time to pause and see the changes. Before your retirement, you have income to pay the bill and for other needs. But, after retirement, you won’t get the income, yet you have to pay the bills and have all the needs.
Retirement and inflation
It is my humble opinion that we have not realised the importance of retirement planning.
Have you ever noticed what was written on the rear-view mirror of your Car or bike? “Objects in the mirror are closer than they appear”
Similarly, your retirement view mirror says, “Objects in retirement are costlier than you imagine”.
Day by day, things are becoming costly because of inflation. It is a potential threat which can damage the quality of your retired life.
Retirement is a long-term goal of our life. So, you have to invest in long-term investment plans.
In case you plan to retire at the age of 60, and you need post-retirement income for 20 years after retirement, then, you have to save at least before 20 years of your retirement. You can’t get the 20 years benefit from the investments in your last few years.
I do not say you have to save all your money for your future. You need to control unwanted expenses. You need to sacrifice and control your desires. You have to
put a budget for everything. Planning makes all the difference to the quality of our retired life.
In cricket, if we start scoring from the first ball, our required run rate will be less, and the target is easy to achieve. Similarly, if you start planning for your retirement when you are young, it is easy for you to accumulate the required retirement corpus.
Ramalingam Kalirajan is founder and director, Holistic Investment Planners
Source: Tax Guru