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What Is the Right Age to Begin Retirement Planning?

right afe to begin retirement planning

One of the key goals of financial security is saving for your future. As young working individuals, we may think that retirement is a faraway goal and we have lots of time to save for it. However, saving up for retirement is a huge financial undertaking, and having a well-devised retirement plan from a young age is critical to your overall financial stability and success.

When planning for retirement, while many of us think all we need to do is put money aside in a retirement fund, the reality is very far from that. One of the most important steps is to constantly go back to your retirement plan and constantly evaluate how inflation and other changes in your financial goals and lifestyle are affecting your overall retirement plan. Adjusting your retirement plan to inflation is perhaps almost as important as saving for retirement itself.

For instance, if you have parked all your savings in an annuity plan such as the Future Generali Immediate Income Annuity Plan offers you a range of benefits, including a fixed annuity for the rest of your life. In case of your unfortunate demise, the purchase price is paid to the nominee and the policy terminates. Under the plan, you have the flexibility to choose a monthly or yearly payout mode. In fact, the policy also offers you an annuity card that ensures convenience in receiving the annuity amount. Under the Future Generali Immediate Income Annuity Plan, you decide your own purchase price. This means that you decide the single premium amount that you wish to invest, for receiving a lifelong annuity. This figure should only be decided after you have taken into consideration all your costs and payments as well as the impact of inflation.

So given all these factors, when should you start planning for your retirement? In simple terms, the answer is as soon as possible. One of the key advantages of starting out early is that you will have numerous investment options at your disposal. If you start investing at an early stage, there is more of a range of market investment instruments available to you and you are more willing to take risks and absorb shocks of the market, which enables you to invest in market instruments that will yield a higher rate of return. However, if you start retirement planning and investing at a later stage, you will have to stick to fixed return investment instruments, which yield much lower rates of returns and often might not even be able to compound against the corroding impact of inflation on your savings.

Additionally, starting to save and invest at an early stage also allows you to take advantage of the compounding impact of saving. Compounding is often cited as the most valuable asset of an investor. While compounding is a tough concept to understand mathematically, the benefits of the same are very easy to understand. Essentially, compounding refers to when the returns on your investment also become a part of the principal amount of your investment and start generating returns. This means that the overall returns you gain are much higher than you had anticipated. Hence, no matter how much you save and invest if you invest in the long run, you will gain disproportionately higher returns after a certain time period. If you save and invest earlier and for a longer time period you will be able to take full advantage of compounding and beat inflation which corrodes the value of your investments. Simply put, the sooner you start to save for retirement, the more money you will save at a compounding rate.

Regardless of when you decide to start your retirement planning, a key thing to do is to constantly review and analyze your retirement plan to ensure that your savings and investments are on track to helping you secure a safe retirement. You should ensure you are constantly reviewing your expenses and how these affect the overall corpus that you think you need to save, while also taking into account the effect of inflation on your savings. If this seems overwhelming for you, it might be a good idea to consult an expert from time to time to get a professional outlook on your retirement plan. Hiring a financial planner or an investing expert may be a worthwhile investment if you are unsure about how to go about your retirement plan.

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