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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’.
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!
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.
Do check out these related articles:
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M. Pattabiraman(PhD) is the author and owner of freefincal.com. He is an associate professor at the Indian Institute of Technology, Madras since Aug 2006. Follow @freefincal “Pattu” as he is popularly known, has co-authored two print-books, You can be rich too with goal based investing (CNBC TV18) and Gamechanger and seven other free e-books on various topics of money management. He is a patron and co-founder of “Fee-only India” an organisation to promote unbiased, commission-free investment advice.
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A big eye opener, hitting bluntly and sharply.
Kishan
Thanks. Please do use the other retirement calculators.
Thank you sir, Excellent work.
Thank you very much.