Will your savings last long enough? Time to rethink your retirement plan

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Why early planning makes all the difference

The sooner you start saving for retirement, the easier it becomes to build a sizeable corpus. Time and compounding work best when given years to grow. Starting in your 20s or 30s allows smaller monthly investments to amass into a large fund by your 60s. Even if you're beginning late, consistent contributions can make a difference with disciplined planning.

Calculating how much you actually need

Most financial experts recommend that you plan to replace at least 70 to 80 percent of your pre-retirement income. To gauge your target, consider your current spending, the likelihood of future inflation, and the number of years you may be retired. For example, if you spend Rs. 60,000 a month today, you may need close to Rs. 1.2 lakh 25 years later, assuming moderate inflation.

Where to invest your retirement savings

Relying solely on one avenue, like a provident fund, is not going to help. A well-balanced portfolio should be constituted with options such as NPS, mutual funds, PPF, and even low-risk instruments like fixed deposits. In addition, equity mutual funds can help in beating inflation over the long run, while debt funds or senior citizen savings schemes can offer stability closer to retirement.

The role of inflation in shrinking your corpus

Many people underestimate how inflation eats into future expenses. A cup of coffee that costs Rs. 100 today can easily cost Rs. 300 in 20 years. That’s why it becomes very important to make sure your investments outpace inflation. If your portfolio earns an average return of 8 percent annually and the rate of inflation stays steady at 5 percent, then your real return is only 3 percent-so planning for a higher return becomes crucial.

Don't overlook medical and lifestyle expenses

Healthcare costs in India are increasing faster than general inflation. A single hospitalization may wipe out years of savings. Invest in a comprehensive health insurance plan and create a separate medical fund to insulate your retirement corpus. Consider lifestyle choices, such as travel, hobbies, or part-time work, all of which will call for making financial provisions.

Review and adjust the plan regularly

Retirement planning is not a one-time exercise. Revisit your goals every couple of years to take into account changing income levels, market conditions, and personal circumstances. Increasing investments by even 10 percent each year can make a big difference in the long run. Retirement is the time to relax, not to be thinking about bills. Save now, invest wisely, and let your money grow while you get ready for a peaceful, financially secure future.