Retirement Savings: Retirement planning might seem far removed from your early years and perhaps even in your 20s and 30s, but the fact is that financial security in later life depends on the decisions made today, which should ideally set one up for the next leg of the savings journey by age 40 for a comfortable and stress-free retirement.
That’s why most people are 40 by the time they are in the middle of a career. A higher salary normally comes with numerous accompanying responsibilities, ranging from home loans, education of children, and other family expenses. By not planning for retirement during those years, it becomes increasingly difficult to catch up later. That’s why financial planners recommend certain saving thresholds for that age.
Financial planners advise that by age 40, one must save at least thrice the amount of one’s annual salary into retirement funds. For instance, one’s salary is ₹10 lakh; hence, the savings for retirement should amount to ₹30 lakh invested in accounts or assets oriented toward retirement.
Do not be daunted by the idea; investing just 20-25% of your income consistently over time from your late 20s should give you that. What matters is getting started early; that there is a benefit from compound interest.
Employer Retirement Plans: Insist on regular contributions to EPF or NPS for long-age security.
Equity-Based Mutual Funds: One can invest in equity-oriented mutual funds through SIPs for potential growth over years.
Retirement Benefits of Insurance: ULIPs or pension forms can do a two-pronged use.
also Read: Warren Buffett’s 10 Golden Rules for Saving and Investing
Not falling into Debt: Lower liabilities mean that much more cash is available for savings.
Turning 40 isn’t supposed to terrify one into thinking about retirement. But it should give an opportunity to evaluate one’s financial journey to date. For those who find they’ve fallen behind, it’s never too late to up the contributions, cut back on unnecessary spending, and invest well. The earlier one saves, the more he works for his money—and the easier the final years of retirement will be.
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