As your career draws to a close, you need to consider what lies ahead. Retirement may bring relief from a hectic schedule but there is no escaping the financial obligations. As the cost of living is steadily on the rise, planning for your retirement is more important than ever. Inflation apart, declining interest rates and fluctuating market conditions may also take a big bite out of your retirement savings.

A long term strategy that gives due consideration to both short term and long term expenses as well as your lifestyle aspirations is key to ensuring a stress-free retirement.
Planning for retirement is firstly a goal setting exercise. Once you are clear on your priorities, working out  the investment options to park your funds in, becomes much easier.

Assess your current living expenses.

Assuming a 20 year retired life starting from the age of 60, your retirement plan will need to take into account your current standard of living as well as future aspirations. If you intend to relocate to a new city after retirement, your retirement plan will need to factor in the cost of rent or outright purchase of a new house.

From daily essentials and entertainment to insurance premiums and loan EMIs, draw up a list of all expenses that you currently pay for. Add a 10-15% margin for inflation and you would have a barebones estimate of the retirement corpus you need.

A monthly budget can also help you identify and eliminate any expenses that are avoidable.

Cost of health care

A week long hospital stay can set you back by more than an average annual salary, depending on the severity of your medical condition. Of course, the cost of incidentals - diagnostic tests, follow-up consultations, rehabilitation services and life saving equipment such as pacemakers - is additional. If you suffer from a congenital disease, seek the advice of your doctor as to the future course of treatment.

This will help you realistically understand the cost implications of healthcare over the long term. A comprehensive health insurance plan that provides benefits such as cashless hospitalization, supplemented by a critical illness cover can mitigate unexpected health surprises as you advance in age.

Life goals

Paying for your children’s higher education abroad and bearing their marriage expenses is an obligation that brings a lot of satisfaction and pride to their parents. However, the financial implications on your retirement corpus must be fully realized

By investing smartly across a range of fixed income and market linked investment options, you can take care of both routine living expenses as well as long term that require spending a considerable amount of money.

Click here to plan your retirement goals.


The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.

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