Cost of delay

Two people can want the exact same retirement corpus. The one who starts later pays a much bigger monthly price for it — not because the corpus changed, but because there is less time left for compounding to do the work.

The workbook calls this the cost of delay, and makes the point with a single table: holding the target corpus fixed and only changing the starting age, the monthly saving needed to reach it rises sharply the later a person begins.

The workbook's own comparison, for a fixed target retirement corpus of Rs 1.18 crore at age 60, assuming a 12% p.a. return:

Delaying the start from 30 to 35 — just five years — nearly doubles the required monthly saving, from Rs 3,376 to Rs 6,280. Delaying further to 40 more than triples it against the age-30 figure, to Rs 11,928. The corpus target and the assumed return never change across the three columns — only the number of years left for compounding does, and that alone is what moves the monthly figure so sharply.

This is computed using Excel's PMT function, with the corpus as the future value, the assumed return as the rate, and the remaining years (in months) as the number of periods.

Using the workbook's own scenario table: Ravi and his younger cousin Arjun both want a retirement corpus of Rs 1.18 crore by age 60, and both can earn 12% p.a. on their investments.

Ravi starts at age 30 and needs to save Rs 3,376 a month for 30 years.

Arjun puts off starting until age 40, thinking "I'll catch up later." He now needs Rs 11,928 a month for the remaining 20 years — more than three-and-a-half times Ravi's monthly figure — to land at the exact same Rs 1.18 crore.

Over the full period, Ravi puts in a total of about Rs 12.15 lakh of his own contributions (Rs 3,376 × 360 months); Arjun puts in about Rs 28.63 lakh (Rs 11,928 × 240 months) — more than double the total money, for the same eventual result, purely because he started ten years later.

Chapter 6 (Miscellaneous Aspects of Retirement Planning), section 6.2, gives the age-30/35/40 scenario table right after introducing the PMT function, to make the case for early retirement planning. Expect a question asking to compare the monthly saving required at two different starting ages for the same target corpus.

• The corpus target and the assumed return are held fixed across the comparison — only the starting age (and so the number of years) changes; do not vary more than one input at a time when reasoning through it.
• The relationship is not linear — five years of delay roughly doubles the monthly figure in the workbook's own numbers; do not assume delay costs scale proportionally with years lost.
• This is a compounding effect, not an inflation effect — the corpus figure itself is unchanged across scenarios; only the shrinking investment window drives the higher monthly requirement.
• Distinguish from the separate impact of pre-retirement withdrawals, which is about taking money out early, not starting late — a related but different point in the same chapter.