We live in an era of instant gratification. Planning for the next few years let alone retirement is not everyone's cup of tea.

Now a days there are even those who claim that they would never wish to retire, including yours truly. But the only constant is change. 

This brings us to the dreaded question: Will we be ready for retirement?

Kal karey so Aaj Karey, aaj karey so ab (Rather than doing it tomorow, do it today. Rather than doing it today, do it now) - This is a famous couplet by the saint-poet Kabir. He might have not guessed back then that his words could prove to be gospel truth for financial planning. 

If you start early, you get more time. 

Let us look at a couple of examples:

At the age of 20, if you begin investing Rs 3000 per month and are achieving a CAGR of 15%, you would create a corpus of Rs 9,42,11,266 by the time you are 60

At the age of 35, If you begin investing Rs 10,000 per month and are achieving a CAGR of 20%, you would create a corpus of Rs 5,82,33,121 by the time you are 60.

Amazing isn't it?

Well this is because of the power of compounding - which according to Einstein was the 8th wonder of the world! 

There is a popular joke doing the rounds these days. It goes like this: 'If you hate your job, take a home loan. You will start loving it!'

Due to the pressure to conform, many young professionals end up taking big loans very early into their careers. This makes them sacrifice their entrepreneurial ambitions and continue working as an employee even if they feel that they aren't meant to work as employees. EMIs also eat up into the opportunities you could have created if you had invested the same amount. 

Presently India is also dealing with large scale job cuts. This is a fairly new experience unlike the US where hiring and firing has been a part of the professional culture for long.

Imagine being fired and unable to get a suitable job for 3-4 months.

Scary?

Now imagine this with a huge home loan EMI due every month!

A long stay in hospital can wreak havoc on one's finances. Room rent, consultation fees, medicines etc can bloat your healthcare bill to such an extent that most of your savings might get depleted. Most people do not buy Health Insurance seperately as they feel the corporate health insurance would save them. However what if a mishap happens between jobs or worse - when you are unemployed?

Health insurance will not only protect your wealth but also ensure you can get tax benefits.

Learn to understand and manage risk rather than avoiding it. Investing in mutual funds or directly in stocks through systematic investment plans for the long term isn't risky. However buying stocks on the basis of tips is risky.

Deciding to only invest in fixed or recurring deposits because they offer fixed returns and do not reduce your principal is the riskiest decision ever.

This is because over a Longer Period of time you end up destroying your wealth.

A capable tax consultant or chartered accountant can help you save a few thousands or in certain cases even a few lakh on your taxes. Do not mind paying the fee that they quote if you can seek their guidance to ensure substantial savings.

Do not rely on only one source of income. Make sure that you are making money even when you are asleep. That can happen if you are able to create multiple streams of passive income. Some examples are:

a) Dividends from stocks

b) Earning through ads shown on your blog or videos

c) Rental income

d) Invest in buying an ATM

From the day when your passive income exceeds your salary, you can decide to quit. 

Do you know Warren Buffet made 99% of his wealth after his 50th birthday. He is 86 today. If you end up dying in your 60s or 70s due to poor health, then there are two problems:

a) You aren't giving yourself an opportunity to enjoy your wealth

b) You aren't letting your wealth grow over a longer period of time.

Therefore it is important to ensure that you exercise and eat appropriately to enjoy the evening of your life.