More People Are Saving For Retirement. Here’s How To Begin
A challenge you might face is saving for retirement while managing everyday expenses without compromising your lifestyle. Rising inflation adds to this challenge
Retirement marks the end of active work and, more importantly, regular income. However, expenses don’t retire—they continue to grow along with you. From regular lifestyle costs to unforeseen medical bills, managing finances without a steady income can be challenging. When you factor in inflation, the strain on your purchasing power becomes even greater. This makes early retirement planning not just important but essential.
Many Indians are now saving and preparing for retirement. The BankBazaar Moneymood 2025 survey report revealed that 58 per cent of people have prepared a retirement corpus, reflecting a healthy trend. Additionally, two out of three people said they are on track to hit their retirement financial goals. If you haven’t started preparing for your retirement yet, now is the time to begin. Here’s why it’s important:
Time And Money Are Vital
Retirement planning depends on two key factors: time and money. With advancements in healthcare, people are living longer today. As a result, the need for a large retirement corpus has grown to ensure financial stability. Starting early becomes essential in this context.
The Roadblocks
A challenge you might face is saving for retirement while managing everyday expenses without compromising your lifestyle. Rising inflation adds to this challenge. Without sufficient funds, many retirees find themselves cutting back on necessities or taking loans, which can become a financial burden in the absence of regular income.
To avoid such scenarios, it’s crucial to take the right steps now for a secure future. Here’s how to begin:
Start Early For Maximum Benefits
Retirement may seem far away in your 20s or 30s, but that’s the ideal time to start planning. However, due to the misconception that there’s plenty of time to save or a lack of understanding of its importance, many of us delay retirement saving. The earlier you begin, the more time your money has to grow through compounding.
Estimate Your Retirement Needs
Retirement planning isn’t just about saving money; it’s about saving enough. Start by estimating the corpus you’ll need to maintain your lifestyle during retirement. Consider factors like inflation, medical costs, any loans that need to be serviced, and life expectancy.
For example, if you’re 30 and spend Rs 50,000 monthly, this expense could inflate to Rs 2.22 lakh per month by the time you retire at 60. Over a 20-year retirement period, you may need Rs 8.8 crore to cover living costs. Adding 25 per cent for medical expenses increases this requirement to Rs 11 crore.
Choose The Right Investment Options
Building a retirement fund involves choosing suitable investments. Some effective options include:
Provident Fund (PF): A reliable long-term savings tool.
Equity Investments (Stocks or SIPs): Offers higher returns over time.
National Pension Scheme (NPS): A government-backed option with tax benefits.
Public Provident Fund (PPF): A safe and tax-efficient choice.
Seeking professional advice can help tailor your investments to your financial goals.
Pick The Right Asset Allocation
An appropriate asset allocation strategy is crucial for retirement planning. As you age, your risk tolerance may decrease. A dynamic asset allocation plan adjusts investments over time, balancing risk and returns. For example, combining a Systematic Investment Plan (SIP) for growth and a Systematic Withdrawal Plan (SWP) for income can ensure long-term financial stability.
Regular and consistent contributions, no matter how small, can grow into a substantial corpus over time. Begin early, stay committed, and secure a stress-free retirement.
(The author is the CEO of BankBazaar.com. This article has been published as part of a special arrangement with BankBazaar)
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