Life expectancy in India is likely to rise from the current 70 to 75 by 2050 and 82 by the end of this century, according to UN estimates in 2022. This means that most people would have to provide for at least 15-20 years after they retire, given that the retirement age is around 60 in most professions.
This shows that delaying retirement planning is not an option. Even so, fewer people take retirement planning seriously, especially when they are younger.
Goals like going on a holiday, children's education and others take precedence as retirement seems to be too far into the future.
"Often, individuals plan retirement later in life because they prioritise their family and children's financial security over their own retirement. They may start building the corpus in their 40s, but they may be caught up in daily responsibilities with lower surplus income. The inflection point is usually around 50 years, but by this time it is already a bit late," says Vikas Sharma, head of wealth management and private banking at IDFC FIRST Bank.
But did you know that the earlier you start planning, the bigger would be the corpus that you will be able to accumulate? Also, if you start early, the monthly investment required to build the desired corpus will be much smaller, because a longer term will give more time for the money to compound. Let's delve deeper to understand how this works.
Why You Should Start
Early First and foremost, an early start will help you enjoy the benefit of compounding. People usually start planning for retirement in their mid or late career when earnings go up, or goals like buying a house, children's education, etc., are met and they have money to spare. However, this robs them of the opportunities they could have had with an early start.
This story is from the January 2024 edition of Outlook Money.
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This story is from the January 2024 edition of Outlook Money.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 8,500+ magazines and newspapers.
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