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Retirement & Pension Planning in your 20s

Retirement planning in your 20s may seem premature, but it offers numerous benefits. By investing small amounts regularly over a long period, your investments can grow substantially. Starting now allows you to take advantage of compounding interest. Let’s better understand how to plan for your golden years in your 20s.

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Features of HDFC Life Systematic Retirement Plan

Planning for Retirement in Your 20s - The Importance of Starting Early

Retirement planning in your 20s
August 08, 2023


In this policy, the investment risks in the investment portfolio is borne by the policyholder

Very few people in their 20s worry about planning for retirement, however, your decisions during this decade could help you build a substantial corpus for a safe and secure future. Apart from creating a financial safety net for the future, many retirement and pension plans also offer life insurance coverage, which protects your family’s finances if anything happens to you. Let’s better understand how to plan for your golden years in your 20s.

The Importance of Retirement Planning in Your 20s

Retirement planning in your 20s may seem premature, but it offers numerous benefits. Starting now allows you to take advantage of compounding interest. By investing small amounts regularly over a long period, your investments can grow substantially. It also provides a financial safety net, ensuring sufficient funds to maintain your desired lifestyle after retirement. The life insurance component secures your family’s future in your absence.

How to Plan for Retirement in Your 20s?

Take charge of your finances and follow these steps to secure your future:

  • Set Clear Goals
    Envision your ideal retirement lifestyle. Consider your desired retirement age, the activities you wish to pursue, and any potential expenses. Setting specific goals helps you determine the amount of money you need to save.
  • Assess Current Finances
    Take stock of your income, expenses and outstanding debts in your 20s. It helps you understand how much you can invest towards retirement goals. Having a clear picture of your financial health lets you devise a suitable plan for retirement.
  • Determine Your Approximate Retirement Needs
    Calculate how much you need to sustain your desired retirement lifestyle. Take inflation, healthcare expenses and all financial obligations into account. Utilise online retirement calculator to estimate the required corpus.
  • Explore Your Options
    Take some time to research and understand the various retirement options available. Evaluate your risk appetite and the ability to save and invest in your 20s. Identify plans that suit your current situation while enabling you to save for future goals. Policies like HDFC Life Click 2 Retire put you in charge of your finances. You can select how your money gets invested while enjoying the peace of mind that comes with life insurance coverage. The plan helps you save for the future while safeguarding your family’s finances in the present.

Saving for Retirement in Your 20s

Work towards a secure future by boosting your savings in your 20s.

  • Start Early
    Time is your most valuable asset in your 20s. Planning for retirement during this decade gives your investments sufficient time to grow. In your 20s, you benefit from a long investment horizon.
  • Automate Savings
    Once you select a retirement plan, ensure you set up automatic transfers from your salary account to your retirement plan. Consistent and disciplined savings and investments help you build a substantial corpus for the future. Prioritise retirement savings with automated transfers.
  • Enhance Your Contributions
    Every time your income grows, increase the contribution to your retirement plan. It's important to allocate at least 10-15% of your salary and bonuses towards your golden years. Whenever possible, avoid lifestyle inflation and invest in your retirement.
  • Cut Back
    Evaluate your expenses and identify places where you can save more. Cut down on unnecessary spending and direct more funds towards your retirement. Minor lifestyle changes can have a significant impact over time.

Benefits of Retirement Planning

Wondering why you should prioritise retirement planning in your 20s? Here’s a look at the benefits you enjoy:

  • Financial Independence
    When you start earning in your 20s, you understand what it means to be financially independent. Planning for your retirement now allows you to maintain financial independence through retirement.
  • Battle Inflation and Rising Healthcare Costs
    Living costs and healthcare expenses will increase over time. Saving for retirement now helps you stay ahead of inflation and prepare for unforeseen medical expenses.
  • Offers Peace of Mind
    Planning for retirement now lets you rest assured that you can enjoy your retirement without worrying about money.

Retirement may seem far off, but starting now helps secure your financial future. Planning for retirement in your 20s allows you to make the most of compounding interest while establishing a secure financial foundation. Take control of your financial destiny now and enjoy a worry-free retirement.

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Francis Rodrigues Francis Rodrigues

Francis Rodrigues has a decade long experience in the insurance sector, and as SVP, E-Commerce and Digital Marketing, HDFC Life, manages the online sales channel, as well as digital and performance marketing. He has had hands-on experience in setting up sales channels and functional teams from scratch over a career spanning 2 decades.

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Author Profile Written By:
Vishal Subharwal Vishal Subharwal

Vishal Subharwal heads the Strategy, Marketing, E-Commerce, Digital Business & Sustainability initiatives at HDFC Life. He is responsible for crafting and ensuring successful implementation of the overall organisation strategy.

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We at HDFC Life are committed to offer innovative products and services that enable individuals live a ‘Life of Pride’. For over two decades we have been providing life insurance plans - protection, pension, savings, investment, annuity and health.

The Unit Linked Insurance products do not offer any liquidity during the first five years of the contract. The policyholders will not be able to surrender or withdraw the monies invested in Unit Linked Insurance Products completely or partially till the end of fifth year.

HDFC Life Click 2 Retire (UIN No: 101L108V04) is a Unit Linked Pension Product. Life insurance coverage is available in this product.

For more details on risk factors, associated terms and conditions and exclusions please read sales brochure carefully before concluding a sale.

Unit Linked Life Insurance products are different from the traditional insurance products and are subject to the risk factors. The premium paid in Unit Linked Life Insurance policies are subject to investment risks associated with capital markets and the NAVs of the units may go up or down based on the performance of fund and factors influencing the capital market and the insured is responsible for his/her decisions. HDFC Life Insurance Company Limited is only the name of the Insurance Company, The name of the company, name of the contract does not in any way indicate the quality of the contract, its future prospects or returns. Please know the associated risks and the applicable charges, from your Insurance agent or the Intermediary or policy document of the insurer. The various funds offered under this contract are the names of the funds and do not in any way indicate the quality of these plans, their future prospects and returns.

ARN - ED/07/23/3423