Here is the ideal time to start saving for your retirement

Presently, any citizen between the age of 18 and 25 years can open an NPS account. 

The Chairman, Pension Fund Regulatory and Development Authority (PFRDA), Hemant Contractor, recently said that the pension regulator is looking at the option of allowing minors to open retirement accounts under the National Pension System (NPS). The Authority is looking at legal implication of such a move, reports Moneycontrol.
 
Starting to build a retirement corpus at an early age may seem a little strange to many, but according to experts, starting early helps you to save a great deal.
 
“The best age to start thinking about retirement is when you start working in your 20s. At that point, retirement is a long way off, and doesn’t seem worth bothering about. However, it is also the time when your responsibilities are fewer and with a little effort, you can save a great deal more than say in your 30s when you have the family responsibilities with all associated expenses of home loans, car loans and children’s schooling expenses. So putting aside a dedicated amount every month to build up a retirement corpus right from your 20s is a good idea,” Adhil Shetty CEO and Co-founder Bankbazaar.com told Moneycontrol.
 
Shetty points out starting early gives you three benefits:
 
1. You can afford to start with a smaller amount and keep adding on to it over time as you have more time to build up a corpus. 
 
2. You can aim for a bigger corpus. Since you would remain invested for a longer time the total money you invest as well as the returns on the invested money would be higher.
 
3. You can get higher returns on investment. Since you start young, you can allocate more investments to equity instruments with higher returns.
 
Amar Pandit, CFA is the Founder & Chief Happiness Officer at HappynessFactory.in, also told Moneycontrol that an early start helps in gaining the advantage of compounding.
 
“Most of us postpone saving and investing towards retirement, assuming we will have enough time to accumulate the retirement corpus in the coming years. However, this is one of the biggest money mistakes we commit,” Pandit added.
 
According to the report, he said that while we continue working for 30-40 years, we do not give our investments enough time to work on our goals. “Time Creates Money’ i.e. compounding over the years will work wonders on your investments. The earlier you start investing, the greater effect compounding will have on your investments. For instance, consider a scenario where you need to accumulate a retirement corpus of Rs 7 Crore by the age 60. If you start saving from the age of 40, you will need to invest Rs 70,000 per month in an investment that yields 12% p.a. to accumulate the corpus. On the other hand, if you had started saving from the age 30, you need an investment of only Rs 20,000 per month to accumulate the same corpus at age 60. This is the power of compounding,” Pandit added.
 
Rajiv Shastri, ED and CEO, Essel Mutual Fund, told Moneycontrol that the ideal time for thinking of retirement is “as early as possible.”
 
He, however, says one should give a hard look at one’s finances before commencing the journey. “Before one starts investing one needs to be comfortable with the state of one's finances. There are some people who get comfortable with their finances in the first month of their career and there are some who may take some time, so there cannot be a one size fits all approach. But basically one should start investing as soon as savings become possible. The sooner one invests the more time their money has to compound, grow and create wealth,” Shastri said.
 
Shashtri also said that a person typically starts working at the age of 24-25 and works for around 35 years which is till the age of 60. “With improving healthcare and longer life expectancy, it is estimated that most millennials will live beyond 90 years of age. A person would have 35 years of earning have to support about 30 years of a non-earning life. So the sooner one starts and allows the money more time to grow, the better it is,” Shastri added.