People often delay important decisions, mainly when it involves investing for retirement. Planning for retirement has become important since improved nutrition, better healthcare, and a health-conscious society are helping Indians live longer. The delay in decision-making can have significant consequences, as it reduces the time available to benefit from compounding returns and may result in a shortfall in retirement savings. 

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Procrastination is a common human trait, but when it comes to retirement planning, procrastination can be a serious financial misstep. Unlike a work deadline, one can’t make up for retirement planning with some last-minute hustle. People in their 20s and 30s tend to see retirement as a distant concern, a thing of the future, overshadowed by more immediate priorities of career advancement and family responsibilities. Although retirement may seem far away, starting early can significantly shape your post-retirement life.

Don’t Ignore Retirement Planning 

Starting early gives you the benefit of compounding to plan your retirement effectively. Compounding allows the returns generated by your investments to be reinvested into the principal amount, leading to substantial growth in your retirement savings over time. The power of compounding utilized correctly allows even small portions of your income to be saved for retirement at an early age to snowball into substantial savings by the time you decide to retire.

People often underestimate the impact of inflation on their money while planning their retirement. Inflation is the increase in prices; thus, as prices of goods and services increase, the purchasing power of your money decreases. What you could buy with Rs 100 ten years ago is drastically different from what you can buy with the same today and what you can buy 10 years from now. This means that keeping inflation in mind, your retirement corpus will need to grow more than anticipated to maintain its purchasing power. Delaying your retirement planning puts you in an uncomfortable situation where you have to save bigger portions of your monthly income to ensure your post-retirement expenditures are met. Starting early gives you time to consider inflation and slowly accumulate the desired amount.

Another reason to not ignore retirement planning at an early age is to shield you from the unexpected. Whether it’s a medical or family emergency, life will inevitably present unforeseen expenses over the years that could disrupt your investment plans. Starting early gives you the chance to cushion yourself from life’s unexpected twists and turns. Growing your retirement savings slowly but steadily from a young age puts you in a better position to absorb the blows of such expenditures and maintain your chosen quality of life.

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Be Retirement Ready 

Though it may initially sound daunting, one must approach retirement planning as more than just financial security. Retirement planning is about empowering yourself to build a post-retirement lifestyle that best fits your dreams and aspirations. By taking proactive steps at an early age, you gift yourself the flexibility to choose an early retirement, pursue your passions, travel the world, or simply spend more time with your family. 

Retirement as a concept does not have to be daunting. There is an urgent need to make India retirement-ready. Starting the planning process as soon as possible is important. 

The author is the head of sales & marketing at Bandhan AMC Limited.

Disclaimer: Mutual fund investments are subject to market risks; read all scheme-related documents carefully. The disclosures of opinions/in-house views/strategy incorporated herein are provided solely to enhance the transparency about the investment strategy/theme of the scheme. They should not be treated as endorsement of the views/opinions or as investment advice. It should not be construed as a research report or a recommendation to buy or sell any security. This document has been prepared based on information already available in publicly accessible media or developed through analysis of Bandhan Mutual Fund.