Retirement is a crucial phase in anybody's life. It comes with dreams and aspirations that you could not fulfill during your working life. Hence, planning retirement early is important so that you can secure a financially stable life. Your 20s have a lot of influence on how your retirement years will be. You may think in your 20s that it's still early and you have just started to earn. Retirement may seem a distant sight, so you put off saving money for your future. This is one of the most common mistakes people make. Starting early for your retirement will increase your income and savings for the future. Starting early, even if you start with small amounts, you can design the perfect retirement for yourself. So, we have addressed the answer to the question, **“Why save for retirement in your 20s”** in today's blog. 

## Things you need to keep in mind in your retirement planning-

**You must consider the following in your retirement planning.**

- 1. Your present age
- 2. Age you are planning to retire
- 3. Current income sources
- 4. Any future income source 
- 5. Current and future expenditure
- 6. How much amount you can afford to keep aside for retirement
- 7. Savings account you possess or wish to open

## Why save for retirement in your 20s?

- 1. When you're young, you have less responsibilities on your shoulders. You have comparatively less expenditure and loan burdens. Especially if you are unmarried, you have fewer liabilities, and your expenses are mostly confined to yourself. Hence, it becomes easy to save more in your 20s.

- 2. The interest earned on your savings and reinvested earnings will be multiplied if you start saving in your 20s.

- 3. Even if you start with small amounts, if you start early in your 20s, you may save more than enough for your retirement. 

## How to save for retirement in your 20s

Now that we have addressed the question **“Why save for retirement in your 20s'**, let's look at different ways you can save for retirement in your 20s. Through various investments, you can save taxes and increase income, thereby saving more money for retirement. 

### 1. National Pension Scheme or NPS
 
[NPS- National Pension Scheme](https://www.npstrust.org.in/) is one of the retirement investment schemes through which you can save for retirement in your 20s itself. Anyone in the age group of 18-70 years, public or private employee, resident or non-resident can become a part of the **National Pension Scheme program.** 

[Section 80CCD(2) of the Income Tax Act](https://cleartax.in/s/section-80ccd) covers the contribution of an employer towards the NPS. [Section 80C of the Income-tax Act](https://www.iciciprulife.com/insurance-library/income-tax/what-is-section-80c-of-income-tax-act.html#:~:text=Section%2080C%20provides%20deductions%20on,individual%20towards%20specified%20pension%20funds.) covers the tax deduction of ₹1.5 lakh for self contribution to the National Pension Scheme. [Section 80CCD(1B) of the Income-tax Act](https://cleartax.in/s/section-80-ccd-1b) covers the additional deduction of ₹50,000 which is allowed if a contribution is made towards the NPS. 

### 2. Life Insurance

[Investment in Life Insurance](https://www.google.com/aclk?sa=l&ai=DChcSEwiT5_6x1uaFAxWOpGYCHau4B_gYABAFGgJzbQ&ase=2&gclid=CjwKCAjw57exBhAsEiwAaIxaZh78NZ-SFISdG8SKTrI1TzsSfsJBBBc7s-o_Q6VFcpctRKy7pXdUWBoCb3AQAvD_BwE&sig=AOD64_1As74KKcWygDS_0i6Xu2V5-G-mKg&q&nis=4&adurl&ved=2ahUKEwi5gPmx1uaFAxX1cGwGHaaGBRoQ0Qx6BAgJEAE) is a great way to save for retirement in your 20s. 

[Section 10(10D) of the Income tax](https://www.maxlifeinsurance.com/blog/tax-savings/section-10-10d) act suggests this provision. Additionally, through tax deduction under [Section 80C](https://www.iciciprulife.com/insurance-library/income-tax/what-is-section-80c-of-income-tax-act.html#:~:text=Section%2080C%20provides%20deductions%20on,individual%20towards%20specified%20pension%20funds.), exemption is provided for investment in life insurance. Investment in life insurance is eligible for a tax exemption of  ₹1.5 lakh through Section 80C of the Income Tax Act. It is to be noted that this exemption provision is available to employees who have opted for the Old Tax regime. However, Section 10(10D) is available under both the **Old Tax Regime and the New Tax Regime**. If you are thinking of saving for retirement in your early 20s, investment in life insurance would be of great help!

### 3. Equity Linked Saving Scheme or ELSS

[ELSS- Equity Linked Saving Scheme](https://groww.in/mutual-funds/equity-funds/elss-funds) is another way through which you can save for retirement in your 20s. This provision is available under [Section 80C of the Income Tax Act](https://groww.in/p/tax/section-80c). A tax exemption of  ₹1.5 lakh is permissible via Section 80C. Investment in the Equity Linked Saving Scheme is beneficial in several ways. The lock-in period of ELSS is 3 years. The investment is flexible through this scheme, making it a viable option for saving taxes. 

### 4. Public Provident Fund or PPF

[PPF- Public Provident Fund scheme](https://www.nsiindia.gov.in/InternalPage.aspx?Id_Pk=55) is an investment scheme through which you can save more for retirement in your 20s. Under [Section 80C of the Income Tax Act](https://groww.in/p/tax/section-80c), investment in the Public Provident Fund is eligible for a tax exemption of up to ₹1.5 lakh. Under [Section 10 of the Income Tax Act](https://www.maxlifeinsurance.com/blog/tax-savings/section-10-10d), interest and maturity are relaxed from tax. The lock-in period of the PPF account is 15 years. 

### 5. National Saving Scheme or NSC

[NSC- National Saving Scheme](https://cleartax.in/s/nsc-national-savings-certificate) is another retirement investment plan that could help you save for retirement in your 20s. The National Saving Scheme is an investment scheme particularly oriented towards small-income and middle-income investors. What makes NSC an attraction to young investors is its low-risk factor. Under Section 80C of the Income Tax Act, investment in NSC is eligible for a deduction up to ₹1.5 lakh. 

**Key characteristics of NSC-**

- 1. Investments can be as low as ₹1000
- 2. Tax exemption  ₹1.5 lakh
- 3. Guaranteed return of 6.8% annual interest

It is extremely crucial to save for retirement in your 20s, especially in today's economy. The earlier you start planning for your retirement, the more benefits you can reap. And if you ever feel stressed and confused about your retirement planning, [PensionBox](https://pensionbox.in) is right here to assist you!

Retirement is a crucial phase in anybody's life. It comes with dreams and aspirations that you could not fulfill during your working life. Hence, planning retirement early is important so that you can secure a financially stable life. Your 20s have a lot of influence on how your retirement years will be. You may think in your 20s that it's still early and you have just started to earn. Retirement may seem a distant sight, so you put off saving money for your future. This is one of the most common mistakes people make. Starting early for your retirement will increase your income and savings for the future. Starting early, even if you start with small amounts, you can design the perfect retirement for yourself. So, we have addressed the answer to the question, “Why save for retirement in your 20s” in today's blog. 

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