When we are young and at the beginning of a career, thinking about retirement sounds insignificant. But retirement is a reality for every working person, even though it may be a distant reality. So it makes sense to plan for life post-retirement in order to maintain a comfortable life style when we are no longer earning.

What we need to understand is that we have a limited number of earning years, say from 25 to 55, with which we need to live for an unknown period of years after retirement, and that's often even longer.

A government employee today has a pension. But many governments across the world are reluctant in committing to their citizens a decent pension as the government itself is not sure on sustaining such promises. This is mainly because of a growing retired population and the demand for a higher pension. In case of an employee with a private sector organization, it is more risky as he/she is totally responsible for post-retirement needs.

Adding fuel to the fire is inflation, which makes life worse at old age. What cost us a few hundreds rupees today will cost thousands in future. Assuming an 8% annual inflation rate, a person spending Rs 15,000 today may require more than Rs 1 lakh for the same expenses after 25 years.

The first action plan should be to start retirement planning at an early age. Be in touch with a financial advisor and compute the amount that would be required post-retirement after taking into account inflation, time value of money, greater life expectancy, medical emergencies, etc. Use the power of compounding by investing systematically (like SIPs) that can make even a small amount add up to a substantial one. You can also channelise a small amount of your investment into a suitable pension plan. Here on maturity, the corpus is invested in generating a regular income stream called annuity.

Remember not to use your pool of savings pre-retirement. If you spend money from your retirement corpus to take care of your current needs, you will lose out in the long run. Planning for retirement is not a difficult task. The challenge lies in implementing the plan with discipline. Do that now. Wish you all a happy financial planning for a peaceful retired life.