Mr Sudarshan’s life is as normal as any other salaried professional. Every morning, he wakes up at 6, does yoga for half-an-hour, takes a bath, eats breakfast and exactly at 8:30 he leaves for his office. Similarly, in the evening, he travels back to his home around 7. At 9, he enjoys dinner with his family and then goes back to bed at around 10.30. This is Sudarshan’s life at the age of 50.

While going through these lines, you may be decoding the unusual pattern. After all, why should you care about Sudarshan and his daily routine?

Though it is true, Sudarshan’s life is no different from any other officegoer, what makes it different is that it is not what he had planned for himself. He wanted to bid adieu to his corporate life five years back, but sadly, he could not do so.

So, where did he go wrong?

Mistake 1: He did not start investing at a young age
When he was in his 20s, retirement was too far a goal for him, and the international vacations were much higher on his priority list. Then by the age of 35, he started investing some amount, which he gradually increased as he neared his targetted retirement age of 45. Now, at the age of 50, even though his mind wants him to retire, his financial state is not allowing him to do so. He doesn’t have sufficient funds to support his entire post-retirement life. Hence, the only option left for him is to keep working until he can accumulate enough funds to retire.

See the cost of delaying for Sudarshan:

Age to Start Investment	Monthly Investment (Rs.)	Years to Retirement*	Accumulated till Retirement!
25	15,000	20	Rs 88.9 lakhs
35	15,000	10	Rs 27.6 lakhs
40	15,000	5	Rs 11.1  lakhs

* keeping the retirement age at 45

! at an annually compounded interest of 8%

Lesson: Start investing as soon as possible. The power of compounding which grows wealth, in the long run, requires some time to show its magic.

Mistake 2: He Did Not Choose the Right Investment Options

Sudarshan did not pay attention to where he is putting his money. Instead, most of his investments were based on two factors – tax-savings and ease of availability. By the time he closed in on his targeted retirement date, he had realised that most of his investments were lying in tax saving FDs and PPF. However, these options gave him returns only between 6%-8%, which were not enough to generate a necessary corpus for retirement.

Had he started early, he could’ve used the available time for the growth of his wealth through equity-linked investments. Instead, he ended up using investments for wealth preservation only.

Lesson: You should not invest money only for the purpose of saving tax, instead focus on the bigger picture. Create a comprehensive financial plan that contains different investment products that offer unique benefits and helps you achieve your ambitious goals. For example, there are pension schemes that let you invest in equity for your retirement plus offers great tax benefits.

Mistake 3: He Ignored the Effect of Inflation

Sudarshan underestimated the power of inflation, and while his expenses kept growing, his investments remained pretty much stagnant. By the time he reached near his retirement age, he had realised that his corpus was not sufficient to meet the current level of expenses for the extended period.

Lesson: With every passing year, the inflation rate will only increase. While planning for retirement, be sure to consider the inflation demon. Otherwise, it will eat away your corpus.

Rs. 1 lakh in 1984, is just worth Rs 7,451 in 2016!

Source: The Economic Times

Mistake 4: He Used Retirement Corpus to fulfil Other financial objectives

In order to compensate for the lost dream and fulfil the dream of early retirement, Sudarshan started investing money with great enthusiasm. However, he dipped into these savings to provide for some other unplanned financial goals. Such dabbling reduced his retirement corpus even more.

Lesson: Though, at times it is may be necessary to meet certain immediate financial needs, you should avoid dipping into your long-term savings for them. It is better to maintain an emergency fund and insurance covers to look after such emergencies.

Mistake: 5 He did not settle the huge burden of unpaid loans before his planned retirement age

Sudarshan had taken a home loan and car loan, which he did not repay completely before his retirement date. As a result, he had to maintain his income to pay off the debt and put off retirement for another couple of years.

Lesson: Make sure that the loan you are starting today is over before your retirement goal. If not, ensure that you can plan and save to repay these liabilities as soon as you retire.

Early retirement is an achievable goal. However, looking at the long post-retirement life, you need extensive financial planning and careful execution to succeed. Nowadays, life insurers provide tax efficient pension schemes where young investors can start saving for their retirement. These pension schemes are no longer the traditional low return safe investment schemes. Instead, they offer you investment choice in equity to help you maximize your returns over a long period of time. Thus, if you wish to enjoy early retirement but find growing your wealth towards this goal complicated, you may consider these pension schemes. And yes, do not forget the lessons from Sudarshan’s mistakes.