Few months back, out of sheer curiosity, I signed up on Quora to know what people are talking about when it comes to topics like savings and investing and to my surprise I found out they are equally confused and curious when it comes to financial management. Quora is a social media site where questions are asked, answered, edited and organised by its community of users.

One question that was persistently being inquired was —when is the right time to start saving for one’s retirement? The question and especially its answer left me like a cat on a hot tin roof.

Most of us, especially the Generation Y, are living paycheque-to-paycheque despite making a good salary. We often run out of money before the end of the month and find it difficult to pay our bills on time and scramble to make ends meet, let alone saving for retirement. However, it’s easier said than done. Diverting money to a retirement plan isn't always so easy. Things always seem to get in the way of important savings goals, whether it is debt, the kids' tuition fee or just simple procrastination. But with this laid back attitude, we tend to forget that the ghost of retirement is going to haunt us anyway, if not now, then few years later. The realisation often hits most of us when one is in late 30s and a growing family and responsibilities start to stare in and the need to save for retirement sets in. At that point, it is a hard awakening call that one is behind time for building a retirement corpus to secure a good future.

Your plans for your retirement should be designed and implemented as soon as you start working. This may seem like a daunting task, but it can be easily managed. Say at age 25, you start investing as low as Rs 5,000 every month into an instrument, earning 12 per cent annual returns. After 30 years, when you are 55 and approaching retirement, the value of this corpus will be Rs 1.54 crore.

Such is the time value of money and power of compounding. The right time to start saving and investing for your retirement is from the moment you start earning. In fact, the provident fund (PF) contribution does take care of this aspect to some extent. If you are planning to regularly contribute towards a pension, it will go a long way to create a sizeable corpus by the time you retire. There are several pension plans that you can consider, ranging from the National Pension System to unit-linked pension plans to regular mutual funds. The focus of all these plans is on fund accumulation, which will grow over time. One must be aware that with retirement planning, time is of the essence but it's not too late to start saving if you're far behind.

shipra@outlookindia.com