Don’t wait until your 40s to think about retirement. Starting in your 20s gives your money more time to grow through the power of compounding. Even saving ₹5,000 a month in a mutual fund with a 10% annual return can grow to over ₹1 crore by the time you’re 60. The earlier you start, the less you’ll need to save later.
June 16, 2025
Think about the lifestyle you want in retirement. If your current annual expenses are ₹6 lakh, with inflation at 6%, you’ll need ₹24 lakh per year by age 60 if you retire at 30 years from now. Aim to save at least 30 times your annual expenses by retirement, around ₹7.2 crore in this case, to live comfortably.
June 16, 2025
In your 20s and 30s, you can take more risks with investments like equity mutual funds for higher returns (around 12-15% annually). As you hit your 50s, shift to safer options like fixed deposits or debt funds (6-8% returns) to protect your savings. A balanced portfolio reduces stress as you age.
June 16, 2025
Save at least 20% of your income every month. For example, if you earn ₹50,000 a month, put ₹10,000 into savings or investments. Increase this amount with every salary hike. Automate your savings with a Systematic Investment Plan (SIP) to stay consistent.
June 16, 2025
Diversify your investments to grow wealth safely. With a 20-30 year horizon, put 70% in equity mutual funds and 30% in debt instruments like PPF or bonds. For instance, SIPs in equity funds can build wealth, while debt ensures stability. Closer to retirement, flip the ratio to 30% equity and 70% debt.
June 16, 2025
Use schemes like the Employees’ Provident Fund (EPF), Public Provident Fund (PPF), and National Pension System (NPS). EPF contributions (12% of your salary) are tax-free, PPF offers ₹1.5 lakh annual tax deductions with 7-8% returns, and NPS provides market-linked growth plus an additional ₹50,000 tax benefit under Section 80CCD(1B).
June 16, 2025
While saving for retirement, plan for nearer goals like buying a house or funding your child’s education. Keep separate funds for these—use fixed deposits or liquid funds for goals within 5 years. This way, your retirement savings stay untouched.
June 16, 2025
Get health and life insurance early to secure your retirement plan. A ₹1 crore term insurance plan for a 30-year-old might cost just ₹10,000 a year. Health insurance covers rising medical costs (which can inflate at 10% annually), so you don’t dip into your retirement corpus for emergencies.
June 16, 2025
Life changes, and so should your plan. Review your investments yearly. If your salary increases or you get married, adjust your savings. If equity markets are booming, rebalance by shifting some gains to debt funds to lock in profits and reduce risk.
June 16, 2025