The world that we know today is changing rapidly with globalisation, innovation and advancements in science and technology. It is a high time now that India’s millennials realise the evolving scenario of finance in the country and appreciate the importance of saving early for a better life after their retirement.
Who are Millennials?
Any individual born between the year 1981 and 1996 (currently aged between 24 to 39 as of 2020) is considered a millennial.
Millennials are known to be confident and ambitious. However, they are keener on enjoying the good things of life (travelling, eating out, entertainment) and do not consider planning for retirement important at a young age.
Why is Retirement Planning Important for You?
As a millennial, right now you might be inspired by successful founders of startups like PayTM, Zomato, Flipkart, etc. and dream of starting your venture at some point in time.
Let us assume, after deducting hefty amounts for urban living such as house rent, car EMI and children’s education, you manage to save ₹1 lakh every month. Assuming you have managed to save ₹20 lakhs aside for financial safety of yourself and your family in future. With modest inflation of 6%, ₹20 lakhs after 10 years would be equivalent to ₹11 lakhs. After 20 years, it would get even worse, equivalent to only ₹6 lakhs.
₹6 lakhs is not a sufficient amount to even buy a new car, let alone support you once your monthly earnings stop.
On the other hand, if you start saving for your retirement, say from the age of 30, you will steadily build a substantial retirement corpus by the time you turn 60. Hence, a robust retirement planning is important for you, even if you are a millennial.
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Benefits of Early Retirement Planning
1. Medical emergencies: As we grow older, our health becomes more fragile, and we are more prone to fall sick. Medical expenses may rise, and hence it would be best to start building a corpus from the time you are young and healthy.
2. Saving for a rainy day: We must save for a rainy day early in life. Life is unpredictable and can turn upside down without warning. A secure retirement corpus can enable you to sail through all hardships of life smoothly.
3. Power of compounding: When you start saving early, you give your money more time to compound. Regularly putting aside a small sum of money will generate a good corpus over a period of time.
4. Supporting Dependents: If you are the sole breadwinner of your family, it is even more important for you to start saving early to accumulate enough wealth for you and your family to lead a hassle-free life, even when your regular income stops.
5. Tax Benefits: You can avail tax benefits on retirement plans. The premiums paid towards retirement plans are tax-deductible under the Indian Income Tax Act. However, make sure to assess the prevailing tax guidelines to determine the exact tax benefits on your retirement investment.
Stay Insured with Kotak Retirement Plans
With Kotak Life, you can opt for Kotak Premier Pension Plan, which enables you to gather enough wealth for your retirement while earning sufficiently and offer assured benefits on death. You can also choose Kotak Lifetime Income Plan, which would enable you to lead a financially independent life post-retirement with a wide range of income options suiting your retirement needs.
Conclusion
A good retirement planning guide can assist you in making better retirement decisions. No company has a “work forever” scheme that would last up to old age. Having a retirement plan will help you with a regular income in retirement years, which will allow you to live your millennial lifestyle without any compromises.
