It's important to visualise a retirement date and plan for it

"My father is at it again," she said, as soon as she entered my room with a view.

"Oh, is he?" I asked. "I guess the October heat in November, might have got to him."

"Yes. He makes me feel insecure about everything in life."

"What did he do now?"

"Basically, he told that when he was my age, he already had two kids, a house and a secure government job. Oh, and he was planning for his retirement."

"Parents, I tell you."

"And I am still single. Of course, I don't have kids. A house is way too expensive in this city. A secure job? What is that?"

"So, that just leaves planning for retirement," I interrupted.

"As in?"

"Well, that's the only thing you can do something about."

"Yes, that is true," she said.

"So? What's stopping you?"

"Stopping me from what, V?"

"From planning for your retirement."

"Oh, but retirement is so far away," she replied. "Why should I bother about it right now?"

"Well, your retirement happens on July 15, 2043."

"Sorry?" she exclaimed.

"That's the day you turn 60."

"Oh, now that you put it that way, it doesn't sound that far off."

"It doesn't. Actually, I was just reading about this in a book, a few weeks back. Let me read out something from that book."

I got up and started looking for the book. It took me 15 minutes until I realised that the book was lying right next to me on the side table.

"Ah, finally, I found it," I exclaimed.

"And what does it say?"

"The book is titled Dollars and Sense and it has been written by Dan Ariely and Jeff Kreisler."

"Your favourite book."

"Can't help it, given that it makes so much sense."

"Tell me, what does it say?"

"It basically says this: "One study found that people discounted the future less when it was described with a specific calendar date rather as an amount of time. We are more likely to save for retirement that happens on "18 October 2037" than one that happens "in twenty years". That simple change makes the future vivid, concrete, real and relatable.""

"Interesting."

"Yes, and this small change in the way people think about the future, makes them save better," I said.

"Now that was the psychological bit. What should I be doing in practice?" she asked.

"Ah. The father's daughter is now falling in line."

"Oh, V. This is no time for jokes. Seriously, tell me. Should I be buying one of those pension plans?"

"Let me ask you a basic question. Why does one save for retirement?"

"Because there might come a time, when one would just like to sit back and relax and take life easily. Or the skill sets one has, might get outdated and nobody might be willing to pay for them. So, one needs money."

"Yes. More specifically you need a regular income every month like the salary you currently get. And how you need money to earn money."

"Which means what?"

"Basically, by the time you retire you must have been able to save a reasonably big corpus of money and that money can then be invested safely to generate a regular return."

"That makes sense."

"The key idea is to build a reasonably big corpus, which can then be used to generate a monthly income."

"I got that," she said.

"And the best way to do that is to have a few systematic investment plans (SIPs) running on equity mutual funds. Regular investing remains the best way to build a corpus."

"Ah, you and your SIPs."

"Well, it solves another problem. As Ariely and Kreisler write: "Making retirement and savings contributions the automatic, default option, so that we must actively opt out of saving, is another wise approach… [It eliminates] the monthly, predictable problems of balancing saving for the future with the temptations and needs of the present."

"Fill it, shut it, forget it, as the old motorcycle advertisement went."

"Indeed."

(The example is hypothetical) Vivek Kaul is the author of the Easy Money trilogy