In India, for addressing retirement needs, there are various available instruments such as EPF, NPS, retirement mutual funds – solution-oriented schemes etc. Nonetheless, to ensure that these asset classes serve you efficiently and rightly you need to ensure that the amount deployed in each such scheme shall suffice your financial needs during your sunset years.

The process of retirement planning entails the below steps:

• Estimating the amount that will be needed for meeting desired lifestyle post retirement
• Deciphering sources of income that shall come in handy for building the requisite corpus such as savings, pension etc.
• Planning and mitigating risk associated with various securities for optimising returns as well as ensuring a steady stream of income.
• Also, you need to factor in metrics like healthcare cost, medical expenses, life expectancy and inflation.
• Considering factors like inflation, healthcare costs, and life expectancy.

So, in large what retirement planning will result in is financial independence together with security for later part of your life when you leave your working life.

What will the delay in retirement planning mean to an individual?

The delay in retirement planning typically means when you delay your plannings and investments for the purpose it will ultimately impact your savings by retirement due to the compounding impact. 

Here this we’ll illustrate this with an example, say an investor who plans his retirement planning at the age of 25 and invests Rs 5000 per month then until 60 years of age- his investment would be Rs 21 lakh and the corpus considering 12 per cent return will come to be Rs 3.04 crore.

Nonetheless, if there is ‘Y’ individual who starts 5 years down the line, then with a similar investment until 60 years of age, his investment amount and hence the final corpus would be lesser by Rs 1.46 crore.

So, the delay overall impacted the investment duration, resulting in a still bigger impact on account of the power of compounding, but the duration of investment made the biggest difference due to the power of compounding. The later you start, the shorter the compounding period, and the greater the loss in long-term returns.

Conclusion 

Delaying investments even by a few years can cost you crores. Start investing early, even with small amounts, to leverage compounding and build a larger, more secure retirement corpus.