The only way to maintain the quality of your lifestyle even after retirement is to have adequate savings for that. Buying a pension plan is a good way to achieve that goal. But what will happen if you delay in starting your investment journey? Here's a look.

Lower Returns on Investments

You can always reap better returns by investing over a long period. If you start investing early, say, in your 20s or 30s and keep investing for the long term, you can get the opportunity to build a significant corpus by the time you retire. However, if you invest late, you will have less time in hand to build an adequate corpus or would have to wait longer to get satisfactory returns from your investment.

If you use a retirement calculator, you can see how the expected returns reduce with the investment horizon. To avoid that, consider starting your investment in the early years of your active earning period. This is the time when you will be able to save more.

Higher Premiums

With time, inflation will keep rising. As a result, the cost of premiums is expected to be more if you delay to start investing in a pension plan. You can check that for yourself by using a retirement calculator. Just take a look at the projected rates of inflation over the coming years and add that to the premium amount of a plan at present. To avoid paying higher premiums, it's a wise decision to start investing early. After all, who doesn't want to reap higher benefits at a lower cost?

Missing Out on Tax Benefits

You must already know that you can get attractive tax benefits by investing in a pension plan. So, it's a good idea to divert money into financial avenues that can help you both save tax and meet your retirement needs. For example, you can make major tax savings as per Sections 80C and 80D under the Income Tax Act of India, 1961. These would add to the corpus that you generate through your investment.

Missing the Possibility of an Early Retirement

Say, you dream to retire early at a certain age but have not built enough savings by that time to retire with peace of mind. There are several costs to be taken care of after retirement. These include your regular expenses, any debt clearances, increased medical expenses (since we become more prone to illnesses with age) and any dreams like buying a house and going on a foreign trip.

Not having adequate savings can prevent you from fulfilling these needs. Therefore, you may need to work for more years to retire comfortably. On the other hand, starting to save early can give you the confidence to retire early with a sufficient corpus to take care of your needs in your golden years.

Consider using a retirement calculator to plan how much you need to save to live without financial worries in the last phase of your life. And make sure to purchase a retirement plan from a renowned insurance provider in India.