Retirement is supposed to be the most relaxing phase of your life. It is the time when you finally get a chance to do things that make you happy. You might want to go on an exotic vacation or invest in some hobby. However, retirement phase without proper planning can take away your freedom. To ensure that you are not becoming financially dependent in your golden age, it is vital that you plan your retirement well in advance.
The ideal time to plan retirement is early 20’s. This is exactly when you start earning your pay cheques. You must be wondering what is the need to plan in the age when you are supposed to enjoy and spend, right? But this theory is backed by strong reasons. The sooner you begin to save, the more time your money has to grow. Let us see a how a retirement plan works:
A retirement plan has two stages;
The first stage is compounding stage, a stage where you invest regularly while you are earning. For example, if you start at the age of 24 and put aside 20,000 a year. By the time you reach 60, you will have an accumulation of 7, 20,000 plus 9- 10 % of annual income of all the compounding years. Now, let’s say you defer the starting age to 35, you will miss out on crucial 10 years and your savings will be much lower.
The premium you invest in the first stage also helps you gain tax benefits.
The second stage is one when you start getting regular income after retirement. It will be like getting a salary without having to work for it, so you don’t have to compromise with your lifestyle even after retirement. You also get the flexibility to withdraw lump sum amount if needed. And if you avail a good plan, you can get this income for life and even after that to protect your family from falling into the financial debt.
In brief, life is going to be without any stress and worries.So, if you haven’t yet started to plan. Start today for a bright post-retirement life.