It is important to start retirement planning early to generate maximum returns from your investments, although you can begin at any age. Most often, people postpone savings for retirement, particularly in the beginning phase of their jobs, believing they have lots of time but if you start saving for retirement early it will be helpful in the longer run.

This delay is often a major factor for people’s unfulfilled goals as it limits the time an investment portfolio requires for optimum performance. No matter how much one earns, the objective of financial security will remain elusive without savings and investments. So, to start saving for retirement early with small regular savings, will go a long way in ensuring your financial freedom at retirement.

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However, any retirement plan must be based on real numbers. For instance, Amol Joshi, founder of Plan Rupee, a financial planning and investment firm, explains: “This needs to be arrived at based on actual numbers by properly calculating monthly household expenses, inflation, years available to create a retirement corpus, life expectancy or years after retirement and so on.”

Here are some benefits for starting savings early for retirement.

Compound Interest: Compounding allows the money to grow exponentially over time. An early start to your savings provides sufficient time for your investments to grow and generate substantial returns, eventually helping you to build a better and bigger retirement corpus.

Diversification: An early start to savings will provide you greater flexibility in investments and risk tolerance, allowing you to generate potentially higher returns over a longer horizon.

Reduced Financial Stress: A solid retirement plan and an early start will provide peace of mind and lessen financial stress, ensuring financial discipline and giving you a great head start.

Also Read: How Do You Estimate A Retirement Corpus And Are There Any Thumb Rules?

Risk Appetite: With an early start, you can take a bigger risk appetite as you will have time to absorb the market shocks and recover from bad investments.

Early Retirement: An early start to savings could also allow you to retire early, enjoy life with close friends and family, and travel. You may have to work even in old age if you start late.

How To Save or Invest?

Joshi offers this thumb rule: “Invest 25-33 per cent of your monthly income. Of that, at least 10-15 per cent must be towards retirement corpus. Invest for other financial goals as well, so you don’t have to dig into your retirement corpus to meet those needs. Otherwise, it will adversely affect your retirement plans or well-being.”

Finally, planning, saving and investing will help you reach your goals comfortably, no matter how lofty they may seem at the start of your journey. So, an early start is the key to retirement planning and ensuring financial freedom in old age.