A Chinese proverb says: “The best time to plant a tree was 20 years ago. The second best time is now.” That attitude is at the heart of investing for retirement.

Investing for retirement is important at any age. There is nothing wrong in starting in your 20’s or in your 40’s. What is more important is awareness to invest for future and the keenness to build the retirement kitty.

Retirement is an important stage in life. It is a deserved reward for years of working from, say, year 26-to year 60. Awareness to save for golden years is improving these days. But it is far less from what is required. With medical advancements, life expectancy is going to improve. Current life expectancy in India is 68 years. It is likely to increase to 80 years for someone who is in their 30s now.

So, what should be your plan? Should you tie retirement allocation to your age, situation in life or your awareness? In our experience, your plan for retirement at any point in time is based on a combination of these three factors. These three aspects are unique to you.

For example, you may be young. You may have a sizeable income, with no responsibilities. Or you may be in your 40’s, but still struggling to provide for family needs and EMIs. Or you could be in 50’s with assets mostly in FDs and willing to take risk now. These three situations are different, age of awareness is different, so planning for retirement for these three individuals will be different.

When you are young, you have more time to save. You can contribute smaller sums for investments. Typically, when you rise in your career, liquidity improves with higher salaries. Commitments are met, you may have more surplus in mid-age say 35-40 years.

Although equity is the best bet for high returns, investing entirely in equity may not be the best strategy for retirement goal. The allocation for equity, debt or real estate per se depends on your risk appetite, required rate, & amount you have as surplus and time on your hands. What’s important is to keep an eye on the risk as you evaluate and accumulate the corpus for your retirement.

Your retirement savings should earn enough to keep up with inflation. This is the most important aspect one needs to keep in mind while saving for retirement.

Equities have compounded faster than any other asset class in the last 25 years. Your starting point makes an impact certainly. Many mutual fund companies now offer solution-oriented schemes or goal-oriented schemes with different asset allocation options for retirement purpose. You have NPS, PPF and EPF options too for conservative investors.

Having said this, to make your retirement planning fool-proof and understand bigger picture of finances, you can consider taking help of an advisor to assess your risk and choose the best fit for you to build your retirement kitty. Make sure the decisions you make are the right ones for your age—your investment approach should age with you as per your unique situation.

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