Why retirement planning differs from other goals?

When a common man talks of financial goals he uses all the terms together. Like, Children Education, buying a home, vacation, car, retirement. Though they all seem important there is a difference we we do not realize instantly. If you want to buy a car, finance companies will line up with offers. If you want to buy a home, housing finance companies will be willing to give you a best quote. If you want to finance your child's education, banks will be willing to give educational loan. Have you ever heard financing for retirement? It is something everyone avoids as none of the financing company wants you to talk about. If you start caring for retirement, you leave less for EMI. The most important financial goal cannot be financed and it is the goal which most of the people do not want to talk about.

In reality, retirement planning starts the day we receive our first income be it profit or salary or commission.

Let us understand this with an example.

Assuming Mr. Early starts earning at the age of 23 years and starts retirement planning at 23 with an expected retirement age of 60, he has 37 years to invest. He starts SIP of Rs. 2000 a month with expected returns of 12% per annum. At the age of 60 years Mr. Early will have Rs. 1,38,79,700 for his retirement corpus.

Assuming Mr. Late starts earning at the age of 23 years and starts retirement planning at 40 years of age with an expected retirement age of 60, he has 20 years to invest. He will have to start SIP of Rs. 15,080 a month with expected returns of 12% per annum to have retirement corpus of Rs. 1,38,71,450.

It is always better to start slow when one has low family and medical expense rather than waiting for full family responsibilities and medical expenses to start in 40's. It is always difficult to save later if one cannot do it now.

Remember, Slow and steady wins the race