Just like life comes with a limited number of years for the average Joe, the job or the profession that one is involved in also comes with an hourglass that speedily runs out. For the financially uninitiated, it is sometimes too late to realise how personal finance buckles under the pressure of inflation and health expenses post retirement. That makes planning for a retirement saving all the more essential. Let’s take a more detailed look at how the scenario unfolds when it comes to planning for retirement through proper investment plans.
Common Excuses for Not Saving Early on for Retirement
Most people would be so burdened with immediate financial concerns that they simply would not be ready to look at a future where they are not working and have no income. That future, sadly, is inevitable for people living a long life and will greet us sooner or later. The following could be some of the reasons why people put off their retirement fund planning for later –
Indecision or Lack of Information – This is probably the most encountered excuse. People know that if their salary goes up a notch, they can easily start living a better life and enjoy more. But that is only when their salary greets them at the end of the month. During retirement, unless and until proper investments haven’t been made through national savings certificates or mutual funds, a recurring supportive income will not be present. Government employees can still eke out a livelihood through their pension, but that would be a way of leading a frugal life. For those in the private sector, the story will be even harsher. Basic savings will not be able to withstand the inflation and situations can turn dire. What people need to understand is that a raise in salary doesn’t necessarily mean a more extravagant life. By investing around 15-20% of their monthly income into mutual funds or fixed deposits and savings schemes, one can build a retirement financial buffer that will stay strong no matter what
Retirement is Far Away – You get a new job and are just 24 years old. Retirement at around 60 to 65 years is decades away, if not ages. But you also need to account that when you are single and alone, it is much easier to save than when you have your own family. When your family has its growing needs, they would look to you for support. In addition, as you grow older, you might have to rely on medications and healthcare facilities. The final argument that could be done here is that the value of money gradually lessens as inflation increases. In effect whatever investments you decide to do at a younger age will be more profitable than the same investments done at a later age
Budget Accommodation – If one has just started working, it will be obvious for him or her to crib about the money that they are making and that it is not enough. But one should also understand that if you had been paid around INR 2000 less, you’d still have been able to lead a life. Considering that you are getting paid less and setting up another bank account to transfer a small sum of money to that will help you save every month. In addition to that, before you make your annual investments, you’ll also earn monthly interest on the money you set aside. Annual investments tend to be more economical than monthly ones
Loan Burdens – New entrants in the professional industry might have an additional excuse of the burden of having a student loan. They could argue that they don’t save enough for now to be able to save for the future. In that scenario, looking for loan consolidation options or shifting to another bank which offers lower interest rates will be a very good idea. That way, one can easily solve the debt pressure that piles up on the first income and still be able to save a bit for the future
Buying a Vehicle – Public transport doesn’t agree with many people and sometimes it is a maze of buses, trams, local trains and taxis that can add to the level of exasperation. Getting a vehicle of your own might seem a good idea then. But have you considered the expenses you would incur on the fuel and maintenance. A two-wheeler will have a comparatively lower upkeep than a four-wheeler, but there will be some amount of money definitely involved almost every month. Getting around in a used vehicle as your first car or motorcycle isn’t a bad idea, especially if you simply cannot deal with public transport. Or you could chose a place closer to work and walk or cycle over
Getting a House of Your Own – Let’s be honest. Owning a house is the dream of almost every second individual who hasn’t got an ancestral bungalow to pamper him. But you could always lease or rent for the initial years of your life when your salary is not much to boast about. When you think that your salary increased by at least as much the amount as your annual savings, start laying down the financial foundation for owning a house. You could always look for a home loan, but remember to live within your means and not get carried away. You would not like it when after retirement you’d need to pay for the instalments of the loan
Expenses for The Kids and The Family – More often than not, education of kids comes across as an early financial obligation than the impending blade of retirement. People logically think that since one liability arrives sooner than another that should be taken care of first. The only miscalculation that happens is, you can’t pay for your retirement with an education loan. Neither can you afford to take a personal loan and hope to repay it effectively
Market Risks – Investments are always subject to market risks. And that is especially true if you are investing lump sums in the stock market and not being keen enough to observe how the market is shifting. Instead of being too brave and plunging headlong into the waters of stocks and trade markets, start small by investing in mutual funds. That way, the risk encountered is negated by the amount of time that is used to strengthen the portfolio
Aversion To a Frugal Life – People often think that now is the time to live and enjoy and that they might not get such a chance in the future. This leads to a lifestyle that could be either borderline or extremely lavish. It’s not a sin to spend your earnings for yourself or your family, but can you be sure that this lifestyle can be maintained after retirement when you have no active source of income? Instead, you could cut down a bit on your current expenses and ensure your current lifestyle doesn’t leave your retirement life too far behind in the tiny luxuries that you so enjoy.