Retirement Planning in India

Retirement planning in India today feels a bit like batting in the last ten overs of an ODI: there is less margin for error, the required run rate is rising, and you need a clear plan for every ball. In the last few years, longer life expectancy, rising healthcare costs, and changing tax rules have made retirement planning both more urgent and more nuanced for Indian families.   

Think of retirement like planning the final stage of a long train journey. You have already covered a big distance, but the last stretch still needs planning for food, comfort, and safety. With higher life expectancy, nuclear families, and fast-changing money rules, retirement planning in India has moved from “good to have” to “non‑negotiable” over the last few years.   

Recent years have also brought higher EPF interest rates, a more attractive new income‑tax regime for many middle‑class earners, and periods of both high and easing inflation. So, a retirement plan now must balance safety and growth, use tax rules smartly, and be flexible enough to handle medical shocks and long lifespans. 

What Retirement Planning Really Means 

Retirement planning in India goes far beyond simply building a big corpus. It is like preparing for a big festival in your family: you need to plan the guest list, food, venue, music, and budget so the celebration feels complete.  

The goal is simple: create a post‑retirement life that is as rich and meaningful as your working years, but without money stress. Many urban professionals are also looking at FIRE (Financial Independence, Early Retirement) so they can slow down or switch careers much earlier than the traditional 58–60 age band. That means the money engine must run longer and support more active, experience‑heavy lifestyles. 

Two Phases: Building And Using the Corpus 

Retirement planning has two clear innings.  

• Accumulation phase: The earning years, where you steadily invest through EPF, PPF, NPS, mutual funds, PMS and other products to build the retirement pot. Recent EPF interest of about 8.25 percent for FY 2024–25 has again highlighted the value of disciplined, tax‑efficient, long‑term contributions.   

• Decumulation phase: The spending years, where the focus shifts to converting that corpus into a reliable income stream while still protecting it from inflation and market shocks. Here, the order and timing of withdrawals, the mix between equity and debt, and your tax bracket under the new slabs all start to matter a lot more. 

Across both phases, your plan must account for rising healthcare costs, inflation, and the real risk of living into your late 70s or 80s. 

Planning By Decade 

A smart way to look at retirement planning is decade‑wise.  

• In your 20s and early 30s, you can lean more on equity because you have time on your side and compounding works hardest here.   

• In your 40s, the focus shifts to balancing loans, education goals, and building serious retirement capital.  

• As you enter your 50s, portfolio safety and income visibility become more important than chasing the last bit of return.  

Life never follows a neat Excel sheet, so your retirement plan must be revisited at key milestones: marriage, children, career jumps, inheritance, major health events, or business exits. 

Step 1: Know Where You Stand 

Start with a clean look at your current finances.  

• Map your cash flows: monthly income, bonuses, business income, and expenses.  

• List your assets: EPF, PPF, NPS, mutual funds, PMS, FDs, real estate, and any ESOPs.  

• List your liabilities: home loan, car loan, education loans, business loans, credit card dues.  

This gives you your net worth and tells you how much surplus can realistically be channelled towards retirement, without stretching day‑to‑day life. 

Step 2: Define Your Retirement Life 

Next, visualise your retirement in concrete terms.  

• Where will you live: metro, Tier‑2 city, hometown, or abroad for children? 

• What lifestyle: modest, comfortable, or aspirational travel and hobbies? 

• What support: domestic help, driver, health care, assisted living if needed? 

Once you write down the lifestyle, you can attach rupee numbers to it and estimate monthly expenses in today’s terms, then project them forward with a realistic inflation estimate based on recent CPI trends. 

Step 3: Estimating Your Retirement Corpus 

There are several ways to estimate how much you need.  

• Rule of thumb (25–30 times rule): Multiply your expected annual retirement expense by 25 to 30. In India, given inflation history and changing healthcare costs, many planners prefer using 30 times to build a cushion.   

• Years of retirement method: Multiply your annual expense by the number of post‑retirement years you expect, then adjust for inflation and expected returns.  

For more personalised calculation, you can use: 

• Human Life Value (HLV): This looks at the present value of your future earnings, adjusts for inflation, and subtracts liabilities to estimate the wealth needed to maintain your current standard of living through retirement.  

• Monte Carlo simulations: These test your plan across thousands of possible market return and inflation paths and show how likely your corpus is to last.   

This step has become more critical in recent years because tax rules, low real rates in some products, and volatile markets can change outcomes meaningfully even when headline returns look similar.   

Step 4: Asset Allocation Using LSG 

At Maxiom Wealth, the LSG framework Liquidity, Safety, Growth is the backbone of retirement planning.  

• Liquidity: Money for the next 1–3 years of expenses, parked in liquid or short‑term debt funds, high‑quality deposits, and emergency buffers.  

• Safety: A solid base, often 5–7 years of expenses, in high‑quality debt instruments where capital protection takes priority.   

• Growth: The long‑term engine, largely in equities or equity‑oriented PMS and mutual funds, designed to beat inflation and support a 25–30 year retirement. 

This three‑bucket thinking has become even more useful now, because it helps manage sequence‑of‑returns risk during sharp market moves and gives psychological comfort during corrections. 

Roots & Wings: How To Use Equity 

Maxiom’s Roots & Wings philosophy helps decide which equities to own for long‑term retirement money.  

• Roots: Strong, stable companies with clean balance sheets, high return on equity, and trustworthy management. These are like deep roots of a banyan tree, anchoring your portfolio when markets are rough.  

• Wings: High‑quality growth businesses that can compound earnings and cash flows at robust rates. They help your corpus outpace inflation and rising lifestyle costs.   

In recent years, this balance has become crucial because certain sectors have seen sharp cycles, and broad index investing has not always captured the full benefit of India’s structural growth. A thoughtful mix of Roots and Wings can improve return potential without recklessly increasing risk.   

Step 5: Choosing The Right Products 

India’s retirement product menu is wide and keeps evolving.  

• EPF and PPF: Government‑backed, with EPF offering around 8.25 percent interest in FY 2024–25 and PPF giving tax‑free returns over a 15‑year lock‑in.   

• NPS: Flexible asset mix between equity and debt, low costs, and extra tax deduction under Section 80CCD(1B).   

• Mutual fund retirement plans and goal‑based portfolios: For higher growth and custom asset allocation.   

• Insurance‑led pension and annuity plans: For those who want guaranteed lifelong cash flows, in exchange for lower flexibility and possibly lower real returns.   

New income‑tax slabs under the updated regime have made it more attractive for many professionals to simplify their tax structure and use a mix of NPS, EPF, and market products, instead of only chasing deduction‑heavy structures.  

Case Studies: Two Paths To Retirement Success 

Real stories show how to put these ideas into action.  

Case Study 1: Mr. Sharma – The Steady Government Path 
Mr. Sharma, a government employee, played a disciplined innings like a Test match opener. He stuck to EPF and PPF throughout his career. These plans gave safety and steady returns. By retirement, he had a solid corpus for a worry-free life. His key lesson: start early and stay consistent.   

Case Study 2: Mrs. Iyer – The Diversified Professional Route 
Mrs. Iyer took a bolder path with NPS and mutual funds. This matched her risk appetite and growth goals. Her portfolio grew strong, balancing risks while beating inflation. Her takeaway: diversify smartly for bigger outcomes. 

Comparing Their Journeys 

Aspect	Mr. Sharma	Mrs. Iyer
Occupation	Government Employee	Professional
Strategy	Conservative safety	Diversified growth
Key Investments	EPF, PPF	NPS, Mutual Funds
Risk Appetite	Low	Moderate-High
Outcome	Secure, comfortable corpus	Robust, inflation-beating pot
Key Lesson	Consistency + early start	Strategic diversification

Both started early, reviewed regularly, and matched plans to their lives. No one-size-fits-all: pick what fits your risk, goals, and stage, like a chef balancing spices. 

Government Vs Private Plans 

Government plans still form the backbone of retirement for many Indians: EPF, PPF, and Atal Pension Yojana bring strong safety and predictable benefits.   

Private options like mutual fund‑based retirement schemes, ULIP‑based plans, and PMS bring higher flexibility, customisation, and long‑term growth potential, but come with market risk and product complexity. So, the right mix is usually a blend: use government schemes as the base and use market‑linked products to power growth and inflation protection.   

The 4 Percent Safe Withdrawal Rule, Revised for India 

Globally, the 4 percent rule says you can withdraw about 4 percent of your corpus in year one of retirement, then adjust that rupee amount for inflation every year, and still have a high chance of not running out of money over 30 years. 

In India, because inflation and healthcare costs can be higher, many retirees may need to start slightly lower or vary withdrawals based on market performance. With higher EPF returns, changing tax rules, and flexible SWP options from mutual funds, there is now more room to design personalised withdrawal strategies rather than follow a hard number.   

Key Risks to Watch 

Retirement plans can fail not because of one big mistake, but because of many small blind spots.  

• Sequence‑of‑returns risk: Poor market returns in the first few retirement years hurt more than similar returns later. A proper LSG bucket strategy reduces this.   

• Inflation risk: Even with periods of lower inflation, long‑term averages can still erode purchasing power quietly.   

• Longevity and healthcare risk: More years in retirement plus rising medical costs can strain a corpus that looked comfortable at 60.   

• Policy and tax risk: Changes in tax slabs, interest rates, or product rules can affect after‑tax returns.   

Regular reviews, diversification, health insurance, and a disciplined withdrawal strategy go a long way in managing these. 

Using This in Your Own Plan 

To sum up, retirement planning in today’s India means combining three things: a clear lifestyle vision, a robust investment framework, and respect for changing rules. On a practical level, you can start by updating your expense numbers for current inflation, checking how much of your money sits in each LSG bucket, and mapping your equity exposure to Roots and Wings.   

Maxiom Wealth’s philosophy is to treat retirement money as the core of your financial life: protect the downside through liquidity and safety and use carefully chosen growth assets to keep your lifestyle ahead of inflation over decades. With a written plan, periodic reviews, and a trusted advisor by your side, retirement can feel less like a leap into the unknown and more like a well‑planned journey you are fully in control of.