In the bid to achieve these goals, most people completely forget the importance of retirement planning!

While your retirement might still be 20-30 years away, the right time to start working towards it is when you receive your first salary. If you believe that your late 30s and 40s are when you should start thinking about your retirement, the belief can make it very difficult for you to live the retirement of your dreams and also prevent you from experiencing several valuable benefits.
Here are some of the most significant drawbacks of delaying your retirement planning-

1. Lower Returns from Investments

One thing common among most of the popular investment options such as mutual funds, direct stock investments, and bank FDs is the fact that the longer you remain invested in them, the better are the returns. By investing for your retirement in your 20s and early 30s, you’d be able to give much more time for your investment to deliver higher returns.

2. Cheaper Insurance

If you are beginning to understand the importance of financial planning for retirement, you might also understand how important insurance like health insurance and life insurance are for every individual. With the rising cost of healthcare in the country, health insurance is an excellent way to keep your health and finances protected. Similarly, life insurance would ensure the financial security of your family after your demise.

3. Tax Benefits

Many of the retirement plans and investment plans in India also provide tax benefits. You also get tax-savings on health and life insurance policies under section 80C of the IT Act. So, by starting your retirement planning early, you not only get to generate considerably higher returns until the time you retire but are also able to reduce your tax burden.

4. More Time to Overcome Mistakes

There is no denying the fact that the world of investment is a challenging one. You need a lot of knowledge and experience if you want to generate handsome returns. As a result, throughout your investing career, you are sure to make several financial mistakes, and some of them can also prove very expensive.

But when you understand the importance of retirement planning and savings from an early age, you get more time to overcome such financial mistakes. Apart from investments, even handling your day-to-day finances is an error-prone process. Start early and you can have more time to work on your mistakes and be financially savvy by the time you reach your 40s and 50s.

5. Aggressive Investment

The rewards potential of any investment is tied to the amount of risk it carries. When you are young and have limited financial obligations, you can be a more aggressive investor and select investment options with higher returns potential. For instance, you can consider direct equity investments or small-cap/mid-cap equity mutual funds when you are young.

If you have selected the right stocks and schemes, your investment could generate excellent returns. But once you get older, say around 40-45 years old, it is better to have a defensive strategy for investment. Debt funds or bank FDs are the preferred options. While these are safer investment options, the returns potential is not as high as the aggressive options.

6. Avoid Unnecessary Loans

Unfortunately, many people in India do not understand the facts about retirement planning and live above their means. They do not know what they can and cannot afford. To keep up with the high expenses, they often take unnecessary loans that put much stress on their finances. While getting a loan such as a personal loan is now easier than ever, it is best only to take one when there is an actual necessity.

7. Better Financial Stability

Based on all the points discussed above, you will also have far better financial stability throughout your professional career if you start planning your retirement from an early age. Knowing the purpose of retirement planning and saving and investing for the same will in a way create a financial safety net that could come in very handy if you are looking to change careers, do something of your own before or after retirement, and make other plans for the future.

8. Retire Sooner

When you are done with your financial liabilities and have adequate money to live your retirement years comfortably, you could also consider retiring early. By understanding the importance of retirement planning from an early age and executing a reliable saving and investing strategy, it can be easier for you to reach your retirement goal sooner in life. If a financially-independent and hassle-free retirement is what you are aiming for, there is no option better than starting early in life. Plant the seed now so that it provides you with the expected fruits in the future.