NEW DELHI : When it comes to retirement planning, goals are as diverse as the needs of the individuals planning them. For many, the answer is expressed as a fixed number, while others may have a financial milestone they wish to achieve before leaving the workforce. The corpus required for retirement cannot be standardised because it is shaped by factors such as lifestyle, retirement age, life expectancy, inflation, healthcare costs, and the number of years that retirement savings are expected to last.
A view of India’s changing demographic and financial landscape explains this better. According to the United Nations Population Fund, nearly one in five Indians will be over the age of 60 by 2050. People are now living longer and wish to retire earlier, which means retirement is likely to last much longer than it traditionally did. This, in turn, requires savings that can withstand inflation, changing lifestyles, and rising medical expenses over an extended period.
Realistically, planning how much corpus you need for retirement should begin by working backwards from your retirement goals. You can calculate your retirement needs based on your current age, monthly or annual contribution, expected rate of return, investment tenure, the proportion of the accumulated corpus to be allocated towards an annuity, and the expected annuity return to estimate both the retirement corpus and the monthly pension.
For instance, a 25-year-old investing Rs 5,000 every month until the age of 60, assuming an annual return of 12 per cent (subject to market conditions), could accumulate an estimated retirement corpus of around Rs 3.25 crore. Of this corpus, 60 per cent can be withdrawn as a lump sum, while the remaining 40 per cent is used to purchase an annuity that provides a regular monthly pension. While the final corpus will vary depending on factors such as age, contribution amount, and expected returns, this illustration demonstrates how starting early and allowing investments to compound over a longer period can significantly influence retirement outcomes
Mitigating the Value Eroded by Inflation
Inflation is one of the most significant variables when estimating retirement needs. A retirement corpus that appears sufficient based on today’s expenses may not provide the same financial security years later. This challenge becomes even greater when healthcare is taken into account.
Medical inflation has consistently remained higher than general inflation, while the incidence of chronic illnesses requiring long-term treatment continues to rise. Healthcare, diagnostics, medicines, and assisted living can become recurring expenses during retirement, making it essential to build a corpus that accounts for these long-term financial realities rather than only present-day expenditure.
Perhaps this explains why retirement planning is beginning much earlier than it did for previous generations. Our data shows that nearly 60 per cent of retirement policy buyers are below the age of 40, while only 11.6 per cent are above the age of 50. The data reflects a notable shift in financial behaviour, with younger Indians increasingly recognising that the size of a retirement corpus is determined not only by the amount invested but also by the length of time available for wealth creation.
The investment choices of these customers reinforce this trend. More than 98 per cent of retirement portfolios comprise market-linked products, led by NPS, retirement ULIPs, and pension ULIPs. Their growing adoption indicates an increasing preference for solutions that focus on long-term corpus creation while also facilitating income generation during retirement. Investors are also displaying greater comfort with long-term market participation, allocating a significant proportion of their investments to equity funds and making relatively few fund switches, reflecting confidence in long-term wealth creation over short-term market movements.
No Geographical Barriers to Early Retirement Planning
Another noteworthy finding is that retirement planning is no longer concentrated in metropolitan India. More than 75 per cent of retirement policies originate from Tier-2 and Tier-3 cities, while participation spans multiple income groups. This suggests that retirement planning is steadily becoming a mainstream financial priority rather than one limited to high-income households or urban centres. The increasing accessibility of long-term retirement solutions has enabled more individuals to begin planning irrespective of where they live or how much they earn.
Finally, the data also points to growing confidence among NRIs in India’s retirement planning ecosystem. NRIs account for nearly 10 per cent of overall retirement policy volumes, with an average ticket size of Rs 2.25 lakh, almost 2.5 times higher than that of domestic investors. The Gulf region contributes the largest share of these purchases at 38 per cent. Interestingly, retirement planning among NRIs tends to begin later, with 16.5 per cent of NRI buyers above the age of 50, compared with 11 per cent of domestic investors.
This delay may be influenced by factors such as plans to return to India or the complexities surrounding cross-border financial and tax planning. Nevertheless, the increasing adoption of retirement ULIPs, pension ULIPs, and NPS among NRIs reflects growing confidence in Indian financial products as effective long-term retirement planning solutions.
These trends reinforce an important principle. The objective of retirement planning is not to accumulate the largest possible corpus but to build one that is capable of sustaining financial independence throughout retirement. A retirement corpus should be evaluated not merely by its size but by its ability to support future living expenses, absorb the impact of inflation and healthcare costs, and continue providing income over an increasingly longer retirement period.
The notion that retirement planning starts at the age of 50 no longer holds true. Emerging trends suggest that more Indians are planning decades ahead, recognising that while the retirement corpus required will differ for every individual, the principles of starting early, investing consistently, and planning for the long term remain universal.
