According to the recently published HSBC Holdings PLC's The future of retirement survey, the ongoing economic downturn has wreaked havoc on the retirement plans of people in the developed world as equity and real estate holdings have shrunk in value. A lot of the people surveyed said they have postponed their retirement plans. But one positive outcome of the downturn is that conspicuous consumption is out and the age-old virtue of thrift is once again in. In India, though we have an annual savings rate of above 30 per cent, it doesn’t necessarily translate into a large retirement corpus as people tend to spend a large portion of their savings on children's wedding and education and on setting them up in their careers.

When should you begin?

The earlier you begin the better. But the answer also depends on your circumstances. If you already own a house (say, ancestral), start saving for retirement as soon as you get your first salary. But if you don't own one, then first collect the money required for making the down payment on the house and then begin saving for retirement. Even if the amount you save at the beginning of your career is small, nonetheless make a start and let the power of compounding work its magic.

How much each month?

Try to save at least 25 per cent of your take-home salary. If you save less, it will be difficult for you to cater to your retirement needs and to the education needs of your children. How much you save should also depend on whether you are an employee and have forced savings in the form of Employee Provident Form (EPF), or a businessman who does not have such savings.

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