Invest when young and rejoice when you retire

HAPPY RETIRED LIFE: A carefree old age is possible if you invest when you are young.

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New Delhi: Mr Wanchoo is a rich man and that is because he was wise when he was young. He planed for his retirement.

Retirement is the last thing on people’s mind when they are young. But it is never too early to prepare for retirement, especially if you want to maintain the same standard of living that you enjoy now.

If you start saving for retirement at 25, assuming that you plan to retire at 60, you would have given yourself an investment time frame of 35 years. If you invest Rs 5,000 per month at the rate of 10 per cent per annum, you would have accumulated about Rs 1.69 crore when you retire at 60.

On the other hand if you start investing at 30 years, you will be able to accumulate approximately Rs 1.3 crore.

If you plan for your retirement at 35, then what you have at the end of the day would be only about Rs 61 lakh—64 per cent lower than if you would have started investing at the age of 25.

If you are between 25 and 30 then you should start with PF and PPF accounts. Also form a long-term stock strategy and buy life insurance, medical insurance, pension plan and ULIPs.

Invest in Reserve Bank of India bonds and post office monthly deposits as they give good post-tax returns. This age is the best time to go for an asset like home.

“If a person is 35 and he is going to retire at 60, what is the money he would need in order to maintain the lifestyle that he is having now by spending Rs 25,000 a month. The answer would be around Rs 1.4 lakh, if we take the inflation rate to be 7 per cent,” says financial planning Kartik Jhaveri.