Future holds a very prominent element of unpredictability but it does not imply that it is feasible to live on the edge. It does not mean allocating a separate fund for your retirement the moment you start making money after college. You are new in this arena of life so it would take a while for you to realize the significance of management of finances as to how you can fend off your expenses and save at the same time too.

The age bracket to begin earning, if after graduation, is 20 to 22 years of age. A novice brain will keep the thought of saving at distance in the beginning. But it is essential to realize that the hard-earned money is meant to support for a decent lifestyle one wishes to have. Thus, one needs to come around the idea of savings and managing expenses as early as possible.

The young populace will have an inclination to satisfy instant gratification which is a usual mindset. The worry about the most lucrative and tax deductible investment plan would not enter their mind. But as years pass by and the wave of future financial needs hits, one will naturally start considering ways to save and invest money.

The Need to Commence Early

Since a young age when you started handling your minute expenses with your pocket money, your spending and saving habits shaped your investors’ mindset subconsciously. Those habits will impact your future financial decisions when you are planning to invest for long term purposes like college fees for children or for your retirement planning.

Why the Last Phase of the Life should always remain a Priority?

Your spending pattern depends on your needs. Human needs are volatile. They differ according to one’s age.

At almost every age bracket you are going to have different short term priorities. So retirement planning is always going to slip away from your focus.

After completing your graduation, normally the pattern of expenses according to the age looks something like this.

The 20s

The 20s is the preliminary phase in which more money and focus is centered on short term financial goals.

They will mainly constitute travel, entertainment, investment in gadgets etc.

If you have a student loan on your head, then your priority will be fending off that first. Thus majority of your pay will be spent in repayment of your loans. Hence savings will be a secondary priority. At this point one may not give a thought about making investment decisions.

The 30s

This phase will demand majorly to save for your own family, to borrow housing loans etc. Again you may tend to ignore your retirement plans.

You may have non-mortgage debts like personal loan, credit card debts, student loans etc. Repayment of these and saving for children’s future will barely spare you with resources to look after your own old age.

The 40s

Your 40s will primarily consist of funding your children’s higher education and further studies and maybe the housing loan borrowed few years ago etc.

Thus, you will have only a couple of decades at your disposal to save for your retirement phase, which is not enough. You cannot solely rely on pension.

Even after your 40s, your personal expenses are not going to slim down. Saving for children’s marriages, family vacations, real estate investments etc, something or the other is always going to creep up.

Hence, retirement planning will always remain a secondary priority in your head. Therefore, one needs to be proactive and start retirement planning as soon as possible.

Why Retirement Planning is Crucial Today?

·      India is a developing nation, with a high life expectancy rate. The phase of retirement is directly proportional to the life expectancy rate. The longer the retirement phase, the more resources you are going to need to support the retired life.

·      The culture of nuclear family is gripping grounds in India. You cannot choose to depend on your children in your retired life. They may end up living in some different part of the world. So it is wise to rule out the dependency option.

Conclusion

Thus, it is advisable to start from your phase of 25-30 years of age to save at least 15% of your gross earnings in your retirement planning. Use a pension calculator for computing your monetary requirements monthly. Pension calculator can help you strike a balance between your savings and pension.