In this blog post I’m gonna talk about common mistakes that those who are retired today have made in their 20s. And what those mistakes young people today should avoid.
Even I'm guilty of making those some of those mistakes first. When you're in your 20s you think you'll know everything and you don't want to take the advice you don't think a day will come when you return 60 and you will retire. But Time waits for no one and sooner rather than later you will turn 60 and time to retire will come this is a mistake I was guilty of doing and 53 just seven years to retire. Second, people tend to delay savings.
Those who are in their 20s think they have a lot of time to catch up. This is a very common mistake.
The earlier you start the more you'll Get because there are three elements to make. Money is the length of the runaway rate of compounding, and the amount of money you invest. If your length of the runway is very high, then the amount of money you have to invest is fabulous.
If two people start investing the same amount of money 10 years apart, then the person who started 10 years below will not 10 years later, will never catch up. Even if the person who started 10 years earlier stops investing at the end of the 10th year. Basically, if I start investing today, and it was for 10 years, and my friend of the same age starts in the 10th year, I don't have any investor single buy after my 10th year still beat my friend by a huge margin. That is the power of compounding three.
Most important you say to little Frank Johnson return is very famous for saying a minimum 30% of your income has to be saved. Why did he say 30% of income has to be saved? In India, average consumer price inflation is between seven to 10% on an average over decades.
In recent times, it has come down to four to 6%. But again started together, it is better to assume in the next 30 years, the average consumer price inflation India will be 7%. That means, it requires an idiot if you're spending 30,000 rupees in your 30s you land up easily spending between 70 to 80,000. In your 60s also life expectancy in India is shot up you can expect the young kids of today can easily expect to live to be 80.
This means they are going to spend an equal amount of time being retired as much as they have spent being working in Western society. The retirement age has gone up to 60 But in India, retirement age is still 58 to 60. So India has a paradox of two things.
We have a very young population in northern Western northern India and the aging population in southern India. This paradox means that the world cannot work till 67, but we'll be forced to retire at 5860. Thus, saving five to 10% of your income is not enough for people to use their retirement money even before they retired.
A lot of people who come to consult with me want to know whether they can withdraw their money or if they have switched jobs, they have withdrawn their pf money, they retire with no investments or practically no investments. Never touch your nest egg, especially your provident fund and graduating money. Even if you are planning to jump first and most important, or have a plan I have spoken to a lot for 20 years and 30 years they have absolutely no idea.
No plan. They spend their money either buying the place In consumer goods or pressures are living your father's dream, they do not realize at least their parents had a secure job. But in the coming years, there is nothing called as lifetime employment. And they may be unemployed by the time they're 50. They better plan quickly.
And finally, the sixth most people tend to give up thinking it's too late. Please understand, it's never too late to give up. It is possible to start at 50 and acquire a nest egg by 60. On waiting, who love to say more, earn more, work harder. Or maybe you will send save the path of the money you required from your retirement income.
And you need to do a part-time job for another 10 years to increase your now increase your nest egg. Only if you start late. All it means your retirement ages move. Please don't give up. So the six points once again, one I know everything to delay savings, three saving too little For withdrawal using retirement money even before it is due fi failing to plan six giving up too early if you if you're young in your 20s and 30s if you don't do if you do not do these mistakes, you will retire young and retire happy.
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