6 Reasons to Start Planning for Retirement in Your 30s
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When you reach your 30s, you are surrounded by all sorts of responsibilities. This is the time that you start thinking of getting married, planning a family and even buying a home. Your income drains quickly in this phase but saving for your retirement should be one of the priorities at this time too. Here’s a look at why you should consider investing in a pension plan in your 30s.
Compounding is the interest earned on already accrued interest. The effect of compounding is visible only when you invest for the long term. So, to give your money the best chance to grow through compounding, start early. According to the rule of 72, if an investment earns 9% compound interest annually, it will double itself in just 8 years. You can use a retirement planning calculator to make an informed investment decision.
Long-term investment options, such as life insurance, medical insurance and pension schemes in India usually provide tax exemptions under the Income Tax Act. Planning for retirement can, therefore, help save a significant amount of payable tax, which will also benefit your present and not just your future.
Planning for retirement is all about building a safety net and ensuring financial independence for yourself in your old age. The reality is that your actively earning years will come to an end at some point and it is never too early to start building a corpus for that eventuality. This is where a pension planning calculator can help you estimate how much you will need to live comfortably post retirement.
Most senior citizens will advise you to start saving for retirement early and that you will regret being financially dependent on your kids and relatives in your golden years. Warren Buffet, the billionaire investor, said, “Someone is sitting in the shade today because he/she planted a tree years ago.” That is good advice for everyone.
Ideally, everyone should start planning for their old age as soon as they start earning but most people don’t even know if they have opportunities to invest. By planning for your retirement when you are young, you are giving a lot of time to your money to grow, instead of investing large sums in at a later stage in life. It is never too early to invest in a pension plan.
Retirement should be a time when you’ve fulfilled all your responsibilities and are ready to now fulfil your dreams. Make sure your finances are in order to do just that.
