Retirement Planning: Start Early, Retire Comfortably

"I'll start saving for retirement when I earn more," is a common refrain among young professionals. But mathematics tells a different story: Time is actually more powerful than amount when it comes to compounding.

The Magic of Compounding

Consider two investors, A and B, assuming an 8% annual return:

At age 60, who has more money? Surprisingly, Investor A often comes out ahead or very close, despite investing less than half of what Investor B did. That is the cost of delay.

How Much Is Enough?

Estimating your retirement corpus involves considering inflation. If your monthly expenses are ₹50,000 today, in 30 years (at 6% inflation), you will need nearly ₹2.9 Lakhs per month to maintain the same lifestyle.

A rough target is 25-30 times your annual expenses at the time of retirement.

Investment Vehicles for Retirement

• NPS (National Pension System): Low cost, tax-efficient, and offers a mix of equity and debt.
• EPF (Employees' Provident Fund): A safe debt instrument for salaried employees.
• Mutual Funds (SIPs): Equity funds are essential for beating inflation over the long term (10+ years).
• PPF (Public Provident Fund): Risk-free, tax-free returns, though with a 15-year lock-in.

Your Action Plan

1. Start Now: Even if it's just ₹1,000 a month.
2. Step Up: Increase your SIP annually by 10% or whenever you get a raise.
3. Don't Dip: Treat retirement funds as untouchable until you actually retire.

Your future self will thank you for the sacrifices you make today.