Think of yourself when you’re 25 years old. Retirement may not be anywhere near your mind. It is all about earning money for your career growth, traveling and setting your short-term goals. Imagine being 45 years old. Suddenly, retirement seems to be closer than you think. You’re thinking about your kids’ education, mortgage loan repayments, aging parents and whether you have enough savings for your post-retirement life. The final goal is the same. The route you choose changes according to the stage of life.
It is only natural that planning your retirement as a 20-year-old would differ a lot from planning retirement as a 40 or 50-year-old individual.

Your 20s: Cultivate the Habit, Rather than Only the Corpus

During your 20s, thinking about retirement might seem premature. Everyone’s preoccupied with securing their first job, paying off college debts or spending their newly acquired financial freedom. But precisely during these years, you need to start planning for your retirement. It is not about making massive investments in your 20s; rather, it is about developing the discipline of making regular investments. Even a little monthly SIP has a long time to work through compounding.

Some of your objectives during this period should be:

• Cultivating your first investment
• Building your emergency fund
• Becoming knowledgeable about finance
• Dealing with any avoidable debts
• Increasing your investments in line with your increasing income

Time is the biggest asset you have in your 20s.

30’s: Balancing the Current Obligations with Future Plans

Your life can become hectic in your 30s as you get into things like marriage, purchase of property, start a family and assume bigger financial obligations. Your retirement plan tends to get pushed to the backseat at this time as costs keep piling up. It is also the age where most people receive salary increments. Rather than letting each salary increment add to your lifestyle, let it add to your retirement savings as well.

Your goals during this phase would include:

• Reviewing your retirement goals every year
• Escalating SIPs with salary increments
• Secure adequate life and health insurance
• Increasing your emergency fund
• Making good use of loans

Your retirement plan must grow with your salary.

Planning for Retirement Needs to Change With Life

Two persons have started their investments at the same age of 25. Kamal, aged 32, has got a pay raise. But he has not spent the complete raise; instead, he has increased his SIP investment. Similarly, Preethi, aged 32, has increased her expenses to lead a luxurious life with the money she got as a salary increase and has delayed making her investments for her future retirement savings. Though both have invested since 25 years of age, Rahul’s strategy of increasing investments gradually would work in his favor and would enable him to build a better retirement corpus. Thus this example stresses the importance of reviewing your retirement plan, which is as important as starting investing in it.

40’s: Time To Re-evaluate Your Plan

The period of 40s is considered one of the most financially stressful periods of one’s life when you support your children, repay your housing loan, prepare for their higher studies, etc. along with your expenses. This is the correct age to check whether the amount that you have set aside for your retirement is sufficient or not.

Questions to ask yourself:

• How much would I require after retirement?
• Am I investing enough?
• Am I too dependent on EPF only?
• Have my retirement goals changed?

In case you start late, do not worry. You can still increase your investment amounts and re-look at your financial plan.

Your 50s: Building Financial Security

This is the time when you have started thinking about the coming retirement. During this period, it will be important for you to be prepared for an easy transition from salary-based life to savings- and investment-based life. Many individuals do not take unnecessary risks in investment; rather, they tend to think about wealth preservation.

Some of your considerations might be:

• Retirement corpus
• Liquidation of unnecessary debt
• Healthcare planning
• Sources of retirement income
• Reviewing your insurance needs

Emotional preparation for retirement is as important as the financial one.

Retirement Does Not Mean End of Financial Planning

Many people think that financial planning should stop once the person retires. In fact, retirement becomes the beginning of another era of money management. While before retirement, your concern was to build up the wealth, after the retirement, your concern would be to manage it properly. You would be having to budget, withdrawal, healthcare cost management and preservation of your savings.

Retirement Planning Requires Ongoing Planning

The requirements of your retirement plans will keep on changing during the course of your lifetime. It might become necessary to make amendments to the retirement plan drafted when you were 25 if you are 45 years old. Things like career changes, marriage, children, business ventures, inflation and health might affect your retirement plans. That is why it is equally important to review your retirement plan annually as it is to draft a plan.

Whatever Your Age, Start Now Instead of Postponing Your Retirement Planning

A lot of people postpone their retirement planning due to the perception that they have been late in planning their retirement already. However, the best time to start was actually years ago. But the next best thing would be to start now. Regardless of whether you are 20, 30, 40 or even 50 years old, starting now is always better than postponing. Each investment you make will give your future self the security you need.

Checklist for Retirement Planning

• Started investing for retirement.
• Review your retirement plan every year.
• Increase investments after salary hikes.
• Maintain an emergency fund.
• Keep insurance coverage up to date.
• Estimate your retirement income needs.
• Review your retirement corpus as you approach retirement

Your Retirement Plan Needs To Keep Up with You

It’s not enough to have one retirement goal since retiring is a process that keeps changing with age. There is something more important to you in your 20s than there is in your 50s. Your salary, duties, way of life and other priorities will keep changing and your retirement plan needs to be adjusted accordingly. But it’s impossible to devise the ideal plan for your future right from the start. It’s more important to make sure to keep reviewing your plan and staying consistent with it.

Connect with Aetram if you want to build a retirement plan that grows with every stage of your life and explore more practical financial insights.

Frequently Asked Questions

1. When should I start planning for retirement?
   The earlier you start, the more time your investments have to grow through compounding. Even small investments made in your 20s can make a significant difference over time.
2. Should I change my retirement plan as I get older?
   Yes. Your income, expenses, responsibilities and financial goals change over time, so reviewing your retirement plan regularly is important.
3. Is it too late to start retirement planning in my 40s?
   No. While starting early is beneficial, increasing your investments and creating a structured plan in your 40s can still help build a meaningful retirement corpus.
4. Should retirement planning rely only on EPF?
   EPF is an important retirement savings tool, but many people complement it with other long-term investments based on their financial goals.
5. How often should I review my retirement plan?
   Reviewing your retirement plan at least once a year or after major life events such as marriage, a salary hike or the birth of a child can help keep your goals on track.