Why Indians Should Start Financial Planning Early for a Secure Retirement

Retirement is a time when people no longer go to work to receive a paycheck from their employers. Instead, spending time with family and pursuing hobbies and lifelong passions take centre stage. Since retirees no longer work, it is crucial to have a steady source of income, such as a monthly pension, to support their needs, including food, medicine, and recreation.

Mr. Ramesh Vishwanathan has explained the importance of financial planning and seeking assistance from certified financial planners at an early stage. The CEO of FPSB India also shared his insights into why many Indians delay financial planning.

FPSB India is the Indian subsidiary of the Financial Planning Standards Board, an international, non-profit, rule-making body for the financial planning profession headquartered in Denver, Colorado, in the United States.

In India, the organisation serves as the licensing and standards-setting authority for the Certified Financial Planner (CFP) certification. FPSB India establishes, promotes, and upholds ethical, professional, and competency standards for financial planners.

Its main offering is the globally recognised CFP designation. This certification indicates expertise in retirement planning, financial management, and tax planning. The CFP certification also signifies a financial planning professional’s skills in estate planning, asset management, and risk management.

The Importance of Having a Financial Plan Early

Mr. Vishwanathan responded to a question about one change people could make today to become better prepared financially for the future. He recommended starting financial planning early rather than waiting for what they believe is the right time.

The FPSB India CEO explained that a financial plan, which serves as a blueprint for one’s financial future, does not have to be complicated. He said it should provide clarity about a person’s current financial situation, life goals, and the steps required to achieve those objectives.

Mr. Vishwanathan also explained why relying on what he described as a “magic retirement number” can leave a person in an uncertain situation. He pointed out that retirement planning cannot be reduced to a single figure and advised people to ask themselves the following crucial questions:

a) What kind of life do you want after retirement?

b) What will your expenses look like?

c) How might inflation, longevity, and family responsibilities affect your financial needs?

Mr. Vishwanathan explained that starting financial planning early gives people more time to understand their requirements, gradually work towards their goals, and make adjustments as their personal circumstances change. The CEO of FPSB India added that this approach allows retirement planning to take place alongside other life priorities, such as funding children’s college education and purchasing a home, rather than becoming a last-minute task.

Furthermore, Mr. Vishwanathan explained that having a financial plan early gives people more time to correct mistakes. He pointed out that financial planning is ultimately not about predicting the future without errors but about being better prepared for what lies ahead.

Why Indians Delay Financial Planning for Their Future

Mr. Vishwanathan observed that many Indians understand the importance of financial planning but still postpone taking action on their personal finances. He explained that this happens because financial planning rarely comes with a visible deadline.

For instance, planning for a child’s college education, changing jobs, and buying a home often involve clear timelines. Meanwhile, people frequently feel they can postpone financial decisions and deal with them later, according to Mr. Vishwanathan.

The FPSB India CEO noted that the misconception that financial planning is meant only for the wealthy continues to prevail. He said some people believe they need substantial amounts of money before they require a financial plan. Others, he added, consider professional advice too expensive.

The CEO of FPSB India emphasised that financial planning should not be viewed merely as wealth management or investment management. Instead, he described it as a way of bringing structure to decisions concerning retirement, debt, cash flow, insurance, and other life goals.

Mr. Vishwanathan’s advice comes as the findings of the FPSB Value of Financial Planning Consumer Research highlight lifestyle goals that many people have been unable to achieve without seeking financial planning advice. The study’s findings indicate the problem of people taking action only when an urgent financial need arises.

The FPSB India CEO’s insights into the importance of seeking financial advice early are particularly relevant because financial goals can become more difficult to achieve later in life. This is due to increasing financial responsibilities and longer life expectancies.

Digital platforms also provide access to vast amounts of personal finance information, making it important to distinguish reliable guidance from potentially misleading advice. Many financial influencers are not certified financial planning professionals and may lack the expertise required to provide sound financial advice.

This creates the challenge of determining which online personalities offer dependable and relevant personal finance information, making Certified Financial Planners (CFPs) an important resource in people’s financial lives.

CFPs can provide effective assistance because financial decisions are deeply personal. They can tailor their guidance to individual circumstances, recognising that financial advice suitable for one person may not necessarily work for another. Personal goals, responsibilities, investment risk appetites, and time horizons vary from one individual to another.

CFPs are trained to assess a client’s unique financial circumstances and help them make important decisions by developing customised financial plans suited to their overall personal and financial situations.