Investment Plan for Retirement: Is Rs 1 Crore Enough to Retire?

Retirement is the foremost concern when it comes to financial planning and money management. It's prudent to start investing early and have an estimated figure to lead a comfortable life post-retirement. However, the rising inflation and falling interest rates make it challenging to settle on an approximate amount as retirement savings.Besides, the average life expectancy has increased over the years due to scientific advancements and modern medicines. As per the UN Population Fund, in a span of 25 years, the average life expectancy has risen to 69 years. The longer life span indicates that you would need more corpus to sustain your life. And if you follow the trend of early retirement, you will have lesser time for money management.In India, one crore is considered a considerable amount as life savings. But it won't be easy to gauge whether this sum will be sufficient after 25 to 30 years.

Consider the retirement age is 60 years, the life expectancy around 80 years and the inflation rate around 7%. Currently, your monthly expense is Rs. 50,000. With an estimation of 7-8% inflation, your monthly expenditure may rise to approximately Rs. 70,000, and in the next decade this figure will surpass one lakh.  With a monthly expenditure of over Rs. 1 lakh you will barely manage around eight years with the retirement corpus of Rs. 1 crore.Also, your retirement corpus will largely depend on your lifestyle. Nevertheless, consider the following points to decide your retirement corpus:

Before retirement, your expenditure and savings revolve around your standard of living, child's education and marriage, buying a house and other discretionary purchase. You may assume of having lower expenses post-retirement considering you may be free of these goals. But you may have medical expenses with increasing age. To be on the safer side, start health insurance as early as possible to generate a larger corpus.

It's a no brainer that the retirement phase means no or lesser earnings. But the majority of us think of accumulating for retirement post-40s or 50s when we are closer to the retirement age, which lends us lower possibilities to generate enough savings. Hence, it's advisable to plan and start retirement savings as early as possible.

As mentioned above, you have to take into account the rising inflation while calculating your retirement corpus.

• Monthly saving schemes, annuity plans, PPF and bank fixed deposits are safer plans for money management. If you are risk-averse, these investments are ideal as they are devoid of market fluctuations and provide assured returns.
• To stay unaffected by inflation post-retirement, you can opt for a Systemised Investment Plan (SIP) to invest in equity mutual funds or stocks. Besides the lure of tax benefit, a SIP also helps you gain higher returns and larger corpus over a more extended period.
• The government's National Pension Scheme (NPS) is another safe and low-risk investment to enjoy tax benefits and amass a good retirement corpus.
• Inflation-linked bonds are alternative options to safeguard from the inflations risk and generate retirement savings.

To sum it up, retirement should be considered as a new lease of life. You should be able to spend these golden years in the pursuit of your unfulfilled dreams that may have got sidelined due to other priorities in your prime years. And while you explore new life opportunities and spend time in self-reflection, you need to be free of stress, especially any kind of financial burden. So plan an appropriate retirement corpus after considering the inflation, and start investing for it now.

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.