Engineer's Finance

I was reading an article regarding retirement today and this provoked me to write an article on the same. I have not planned way too ahead of my future. I have planned for next 3 years or so financially. I know this is not a big thing but for me it is. I was not having a goal as to do what and now I am happy that I have a goal and a rough plan as to what to do next.

I am sure many of you would have not bothered about retirement just like me. I am just 25 now and I think it is way too early for me to think about it. But the truth is, the sooner I start thinking about my retirement the better it will be for me. Yeah I know it is way too early to start thinking about it but it is a good move. We might think it is not necessary and we can start it at a later point of time and I am sure that later point of time will be very late.

I was thinking how to go about retirement. Assume that I want to retire with at least 2 Lakh cash then if I start today then I have to save at least Rs. 500 every month for next 35 years to reach my goal. I am sure that it is not very difficult for me to save that much amount, but I lack discipline to do that and it is not as simple as it sounds to save up Rs. 500 every month. If I assume that I will get a compound interest of say 10 % then I will reach the target in 16 years. I just need to save Rs. 500 continuously for next 16 years to make 2 Lakh.

Assuming that I need Rs. 50 Lakh as my retirement amount, I need to save up monthly Rs.5000 for next 24 years. This looks cool. If I had started say at the age of 22 I could have retired at an age of 46. Now that I am 25 I can retire at 50 assuming that I get 10% interest on the savings that I am going to make. This sounds pretty cool. But the discipline with which the money is saved will matter most. It is not as easy as one can think. It needs dedication and also determination to save up and enjoy the later part of life.

If I start at the age of 30 then I need to save at least Rs. 7000 per month to reach the goal of 50 Lakh and it takes 20 years to reach the goal. You might argue that isn’t it sane to save 7k from 30? I have nothing against it, but more money means more trouble and there is always an issue with it. it is not easy to save up Rs. 7k every month.

There is nothing wrong in starting the retirement fund whenever you feel like but my suggestion would be to start it as soon as possible. It will give you enough opportunity to play around with your money later. It is better to have a retirement goal and start working towards it. I know it does not matter to many people but still think over it. Future lies on your hands today and not tomorrow.