Retirement Planning: Cost of Postponement Calculator!

Published on / By M. Pattabiraman Twitter: @pattufreefincal / 4 Comments

Published: December 25, 2012 at 8:50 pm

Last Updated on January 31, 2021

This is a calculator which hopes to impress upon you how expensive it can be to postpone planning for retirement.

Talk to an average person in his/her mid-20s today about retirement planning and the typical response is:

“Please stop! I have just started earning and want to ‘enjoy life’. Buy a car and many other I always wanted. My retirement is decades away. Let we worry about that down the line”.

You talk to them about inflation in consumer items and health care, tell them they will have other priorities and goals once they get married with an inevitable increase in expenses. To this they condescend a little and agree to get started ‘soon’.

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Unfortunately ‘soon’ translates as couple of years! Inaction makes time fly!

This calculator give the monthly investment needed for retirement planning now, one year later, two years later, and so on.

The cost of postponement compounds (that is increases exponentially) with each passing year with a rate that is close to double the rate of inflation! In fact I was pleasantly surprised to note that this rate is independent of inflation!

cost-of-postponement

 

What this means in simple terms is: postponing retirement planning is a sure shot way to lose financial independence in your retirement. The amount needed to save each month would become so huge if postponed by just a few years that it would be impossible to match your expenses in retirement.

Inflation is a very important parameter in financial planning. However postponement, specifically inaction is the biggest enemy.

Check for yourself!

Download the cost of Postponement Calculator!

This calculator was suggested by PV Subramanyam who blogs at subramoney.com

If you have already started investing towards your retirement please forward this calculator to your friends who have done nothing about it.

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Pattabiraman editor freefincalDr M. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. He has over nine years of experience publishing news analysis, research and financial product development. Connect with him via Twitter or Linkedin or YouTube. Pattabiraman has co-authored three print books: (1) You can be rich too with goal-based investing (CNBC TV18) for DIY investors. (2) Gamechanger for young earners. (3) Chinchu Gets a Superpower! for kids. He has also written seven other free e-books on various money management topics. He is a patron and co-founder of “Fee-only India,” an organisation for promoting unbiased, commission-free investment advice.
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