7 Benefits of Early Retirement Planning in India

2025-04-15

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Most of the people in India have this misconception that retirement planning can be expensive and is limited to the rich. In such cases, financial priorities weigh down on retirement plans such as childcare, medical emergencies, and improved living standards. This makes it difficult to save any money and invest in early retirement planning.

However, planning early can change the game. Whether you aspire to achieve financial independence, enjoy a comfortable post-retirement lifestyle, or pursue your passions, starting your retirement planning journey early can make it all possible. In this blog, we’ll explore seven key benefits of planning for retirement early.

Key Takeaways

Beginning your retirement planning in your 20s allows your investments to grow exponentially over time, thanks to the power of compounding.
Early retirement planning through eligible instruments offers tax deductions under Section 80C and helps you reduce overall tax liability while building a secure future.
Retirement plans typically offer better returns than standard savings accounts.
A well-built retirement corpus can provide financial support during unexpected health or life emergencies.
Smart retirement planning ensures continued financial security for your dependents, even after your active income stops.

7 Benefits of Early Retirement Planning

Here are seven benefits of early retirement planning, which may interest you in starting your retirement planning as soon as possible, if you do not have a retirement plan yet:

Tax Benefits of Retirement Plans: Tax benefits are one of the major advantages of having an early retirement plan. By investing your income in infeasible plans, you get to save some tax. Furthermore, retirement plans help you diversify your tax payments.
Safeguard Your Assets and Have a Secure Future: You do not need to liquidate your assets for a better retirement income. By investing in a retirement plan, you do not need to rely on your assets. Thus, early retirement planning can help you have a secure future.
Better Returns on Your Savings: While keeping money in a savings account offers safety, the returns are often minimal and may not keep pace with inflation. On the other hand, investing in dedicated retirement plans allows your money to grow over time through compounding and market-linked gains. These investment options not only help preserve the value of your savings but also offer significantly higher returns.
The Power of Compounding for Retirement Corpus: Many people believe that simply saving a portion of their income is enough to build a sufficient retirement corpus. However, this approach often falls short, especially when the impact of inflation is overlooked. A more effective strategy is to harness the power of compounding where your investments generate returns, and those returns, in turn, generate more returns over time. The earlier you start, the longer your money has to grow, helping you accumulate a significantly larger corpus for a comfortable and financially secure retirement.

Learn why should you consider inflation when planning for retirement?
Unprecedented Emergencies: A retirement corpus helps you sustain unprecedented medical emergencies. By having a retirement plan, you can fall back on funds as and when required. Remember that with age, your medical expenses are bound to grow.
Support Your Dependents: By having a concrete plan in place, you can support your dependents. Retirement plans act as a financial cushion and give your dependents financial security. You can ensure that there is no loss of income after retirement with smart financial planning.
Start Early for Maximum Benefits: To reap the maximum benefit of your retirement plan, you will have to begin early. The best choice for any early retirement plan is to begin investing in your early 20s. By doing this, you extend the tenure, and you can pay lower premiums.

However, if you begin in your late 20s or early 30s, you can make up for any shortfall by bridging the gap. Fix your retirement age and needs, and start investing in a retirement plan.

Question To Ask Before You Start Retirement Planning

Smart Planning vs. Simple Saving: Why Strategy Matters for Early Retirement

When it comes to retirement, starting early and making informed investment choices can make all the difference. Consider the example of Akash and Shravan—both shared the dream of retiring early, but their approaches were vastly different.

Shravan believed that saving would help him build his retirement corpus. He tried saving a part of his income every month for a retirement plan. Akash began building his retirement corpus early in his 20s by investing a portion of his income in Canara HSBC Life Insurance iSelect Guaranteed Future Plus. Akash would set aside a part of his income for his investments.

In the end, Akash could realise his dreams due to his smart financial planning. Shravan was only privy to a meagre amount and ended up working for a longer period.

To avoid this from happening to you, follow these 3 steps:

Factor in Your Existing Financial Situation: Before investing in a retirement plan, you need to assess your current financial situation. This includes an assessment of your assets and sources of income.
Have a Tangible Retirement and Financial Goal: Fix a retirement age and establish financial goals for yourself. This can include setting a target for your retirement. For instance, you want an early retirement at 50. You can now choose a plan that will help you retire at 50 with viable options.
How Much of a Risk Appetite Do You Have?: Risk appetite is a major aspect of retirement planning. By assessing your risk appetite, you can devise a suitable plan for yourself. This also depends on your current financial situation and the financial goals you want to establish later.

Choose a Retirement Plan that Best Suits your Needs

Early retirement planning is necessary for a sustainable financial goal. By having a retirement plan in place, you get to accomplish all your financial goals. With Canara HSBC Life Insurance, you get to avail yourself of a flexible retirement plan and build your retirement corpus. Understanding and knowing your options helps with better retirement planning. We have a comprehensive set of plans to kick start early retirement planning. Browse through our plans to customize your goals and changes your requirements. From securing a guaranteed income post-retirement to providing a life cover – our life insurance plan provides you with a safety net.

Disclaimer - This article is issued in the general public interest and meant for general information purposes only. The views expressed in this blog are solely those of the writer and do not necessarily reflect the official policy or position of Canara HSBC Life Insurance Company Limited or any affiliated entity. We make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the blog or the information, products, services, or related graphics contained in the blog for any purpose. Any reliance you place on such information is therefore strictly at your own risk. You should consult with a qualified professional regarding your specific circumstances before taking any action based on the content provided herein.

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