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Retirement Planning in India - Simplified!

Retirement! It sounds like a relief but is equally a scary thought for many individuals. Generally, retirement planning in India has been consigned to the time of retirement. However, this trend is changing as there are many risks emerging every day like uncertainty of job, rise in various diseases, etc. We seek to clarify these doubts for the benefit of our readers in the following discussion. Let’s begin!

What is Retirement Planning?

Retirement planning refers to a process of fixing a retirement income goal and finding ways to achieve those goals.

Traditionally, it is believed that an individual will need 70% to 90% of their pre-retirement income to sustain them during their retirement years. If they are earning Rs 60,000 per month (before tax), they would require almost Rs 42,000 to Rs 54,000 per month during retirement. Thus, this would help them enjoy the same standard of living before retirement.

Moreover, if your target is to achieve 70% of your pre-retirement income during your retirement, you will thus have to look for options that would help you save appropriately.


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Why Do You Need Retirement Planning?

Life is a journey. We all are travelers. There will be a time when you will enjoy your first salary, and then one fine day, your department colleagues will be cutting a retirement cake on your farewell day. Time runs fast.

Post-retirement life is often seen to be full of managing daily costs, medical expenses, and other unimagined situations, like the ongoing pandemic. To add to all this, will be inflation, which will keep making things expensive. Thus, to be able to deal with all these problems during your retirement, you will have to plan it out well in advance during your working period.

The Best Approach 

We all have faced that situation, haven’t we? When we were caught in a traffic jam and arrived very late at the station. The same goes true for our retirement as well. Many of us delay it, and it gets too late.

Many times, individuals are unable to set aside the required money needed for their retirement purposes. Furthermore, they are either able to do it partly or not at all. They postpone such plans.

This is a wrong approach, as per our opinion.


Nonetheless, the right approach is, to begin with, whatever you have. You can fund the deficit later on. If you will wait for the right time, it might be too late. Also, another reason can be that a major portion of the money goes to fund your current lifestyle expenses such as shopping, entertainment, etc.

Moreover, it is equally important to focus on your retirement. Balancing your current and future needs is ideal. Thus, it is important to make a strong retirement plan. It can also be the case that people might think that an old age with a rich lifestyle can bring additional problems and thus they reject this idea.

Changing this mindset is important. Ignoring your retirement will only complicate the situation. Thus, it is key to start planning much ahead in your career.

retirement planning India

Steps Of Retirement Planning

1. Decide when to retire: Generally, the retirement age is 60 years. However, some individuals may have plans to retire at 55 as well. So, it is basically a personal choice. However, it has to be remembered that once you retire, your regular income stream will stop as well. Or it can drastically reduce, in case you are a pensioner.

Life expectancy plays a major role in this. For example, if you are a 30-year-old, you may live up to 75 years. In case, you decide to retire at 60, you will have to arrange for 15 years of income(75-60=15). Thus, you will have to consider your retirement age accordingly to begin the planning.

2. Start early for your retirement: As it goes for every other goal in life, one must plan as early as possible. You will have time in your hands as well as the power of compounding. Delaying your retirement plan might affect your other goals. As a worst-case scenario, you might become financially dependent on your children. The early bird catches the worm! Starting young, you will have the power of time as you can accumulate a bigger corpus for your retirement. It is an idea that is catching up and more financial awareness is still required.

3. Find out your Retirement corpus: It might seem to be a big term. However, a retirement corpus is the amount of money you will require post your retirement to meet the expenses.

It allows you to continue your lifestyle. You will have to find out your yearly expenses like your household, medical, travel, EMI, children’s fees, etc. A correct assessment of the same will thus help you find out your monthly expenditure.

Inflation will also have to be considered. Also known as the future value of money. Planning for retirement in India is thus of vital importance now.

4. What will your savings amount to in the future: What you are able to save each year, will determine your retirement corpus. Savings is the excess amount that is left after deducting your annual expenditure from your total salary.

Set aside a portion of your savings for the retirement corpus and don’t touch it unless it is extremely urgent. You will then have to calculate the future value of your investment by considering the rate of return.

For example, Mr. Sharma is able to save Rs 1,00,000 every year. He is 35 currently and plans to retire at 60. Thus, he has 25 years to accumulate a retirement corpus. If he invests this amount at a 10% rate of interest for 25 years, he will have Rs 9,834,706.

5. Reduce the avoidable expenses: In case you are facing difficulty to reach your target, you should reduce the avoidable expenses. These avoidable expenses can be Entertainment, foreign trips, unnecessary shopping, etc. Also, this will help you in achieving your target corpus.

6. Seek professional advice: Based on your current age and your risk appetite, you should diversify your investments across various asset classes. Equity classes give inflation-adjusted returns but are highly volatile as compared to debt classes.

Thus, it is important to seek professional advice and reach out to a financial planner who will help you in breaking this down easily and present to you the different plans you can avail to achieve your target.

7. Monitor your plan regularly: Making a plan is one thing and to keep a track of it is another. Furthermore, any changes in your income, retirement age, market scenario, etc. must be taken into account, preferably each year, and you must alter your retirement corpus accordingly.

When to start planning?

Early savers are early gainers. This fact holds true in retirement planning as well. Generally, this has to do much in advance.

Imagine a situation, where Amit, a 25-year-old trainee, decides to accumulate a Rs 2 crore retirement corpus at 60. He starts saving and investing Rs 3500 every month. In 35 years' time, his corpus would cross Rs 2.3 crores. In contrast, Ashish, a 30-year-old employee, decides to do the same, in 30 years, he would be able to accumulate only Rs 1.2 crore. Almost half the corpus!

Delaying the investment can make a lot of difference so start planning early.

How much money do I need to retire in India?

This is a complicated question! It depends on what your current age and retirement plans are firstly. Typically, 60%-80% of your pre-retirement monthly income is ideal for those retiring at 60.

However, for those wishing to retire much early, their retirement corpus would be much bigger as they will have a lot of years to meet their expenses. Using a retirement calculator will enable you to get a fair idea of what will be the situation. Life insurance helps in reducing the problems any family will fall into. For a surviving non-working spouse, this will come as a big relief to meet the family's expenses. Planning for retirement in India, and many other parts of the world are still way behind and people should be educated about it.

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What is the Importance of Insurance in Retirement Planning?

To get to the very basics of the issue, planning for retirement is all about taking care of your retirement expenses each month. At retirement, your normal income stream stops. Your retirement corpus will become a source of income for you. It will help you meet your monthly expenses as well as any other need that might arise. It will help you lead a respectable life.  More and more people are getting financially aware and getting conscious about their retirement and have begun planning for it.


Retirement planning is an important exercise that every individual should begin as early as possible in their work life. It is all about creating a retirement corpus that will fund your monthly expenses once you retire. Moreover, it requires an individual to set aside a portion of his savings for this purpose every year. Investing this saving in appropriate investment opportunities after seeking professional investment advice will help you achieve this target easily. Retire in grace and remove all your worries by thinking now!

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