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Financial Planning
No retirement plan? Here’s why that’s a warning sign
Key takeaways
- You will stop earning, but expenses will continue.
- Longer life expectancy means more retirement years to fund.
- Inflation will erode the value of your savings over time.
- Medical costs after 60 can be a major financial burden.
- A retirement plan lets you maintain your lifestyle and independence.
Most of us spend years building our careers, buying homes, raising families, but how many of us actively plan for the years after we stop earning?
Retirement may seem far away when you're in your 20s or 30s.
But here’s the truth no one tells you early enough:
Planning for retirement is not optional, it's essential. The earlier you start, the easier and lighter your future becomes.
You will stop earning one day. It’s a simple but powerful reality — there will come a day when you’re not working 9-to-5 anymore. Maybe you choose to retire at 58. Maybe at 65. Or maybe circumstances force you earlier. Whatever the reason, your active income will stop. But your expenses will not. You will still need money for:
- Daily living (food, electricity, transport)
- Medical needs
- Travel and leisure
- Helping family members
- Unexpected emergencies
If you don't have a solid retirement plan, you might find yourself struggling at a time when you should be relaxing.
Longer life expectancy = More years to fund
Thanks to better healthcare and lifestyle changes, people today are living much longer. It’s common to live well into your 80s or even 90s.
Imagine this:
- You retire at 60.
- You live till 85.
That's 25 years of life after retirement. 300 months where you need to pay for everything without a monthly paycheck.
Without a strong retirement amount, you might outlive your savings, and that's not a risk you want to take.
Inflation will keep eating into your savings
A simple coffee that costs ₹150 today might cost ₹400 twenty years later. That’s inflation at work — steadily increasing the cost of living year after year.
If you think ₹1 crore will be enough for retirement today, it might feel very small when you actually need it.
Your retirement planning needs to beat inflation, not just match it. This means your savings must grow over time, not just sit idle in a savings account.
Medical costs are increasing
Health expenses after 60 can become a major part of your budget. Regular check-ups, medicines, hospitalizations, surgeries — healthcare is expensive.
Even if you have health insurance, there might be:
- Co-payments
- Treatments not covered
- Inflation in medical costs
- Nursing or assisted living needs
Without a good retirement fund, medical emergencies can quickly wipe out whatever savings you have.
You want to maintain your current lifestyle
After spending 30–40 years working hard, you deserve to enjoy your retirement in peace. You deserve to:
- Travel
- Eat out
- Spend time on hobbies
- Support your grandchildren
- Live independently
But all of that costs money.
A retirement plan ensures you don’t have to downgrade your life after retirement. You continue living with the same dignity, comfort, and freedom that you built for yourself.
You may not want to depend on others
Most people don't dream of being financially dependent on their children or relatives in old age. You want to maintain your financial independence, your self-respect, and your freedom to make choices.
Having a strong retirement fund lets you:
- Make your own decisions
- Live where you want
- Spend how you want
- Help others if you wish
You are not a burden. You remain a blessing.
How can you start building a retirement plan?
Thankfully, building a retirement corpus doesn’t have to be overwhelming.
With simple, disciplined steps, you can create a strong financial base for your future.
Start a SIP (Systematic Investment Plan)
Invest monthly in diversified mutual funds based on your risk appetite. Equity Funds can help if you have a long horizon (10+ years), while hybrid or debt funds can be added as you approach retirement.
Open a PPF (Public Provident Fund)
It’s safe, government-backed, and offers tax-free returns. A 15-year PPF can be a powerful backbone for your retirement corpus.
Consider NPS (National Pension System)
If you want a pension post-retirement, NPS is a strong, low-cost option. It also offers extra tax benefits under Section 80CCD(1B).
Build an Emergency Fund
Separate from your retirement savings, have 6–12 months of living expenses saved up for medical or other emergencies.
Get Health Insurance early
The earlier you buy health insurance, the cheaper it is. Buying a plan now ensures you have coverage when you really need it later.
Invest in senior citizen schemes later
When you actually retire, you can invest in products like:
- Senior Citizen Savings Scheme (SCSS)
- Monthly Income Scheme (POMIS)
- Monthly Income Plans (MIPs)
These give a steady, safe income during your golden years.
| Product | Best For | Returns* | Risk Level |
|---|---|---|---|
| Employee Provident Fund (EPF) | Salaried individuals | ~8% (government-backed) | Low |
| Public Provident Fund (PPF) | Long-term safe saving | ~7% | Low |
| National Pension System (NPS) | Retirement-specific savings with tax benefits | ~9-10% | Moderate |
| Equity Mutual Funds (SIP) | Long-term wealth creation | ~12% | High |
| Fixed Deposits | Short-term parking near retirement | ~6-7% | Low |
| Senior Citizen Savings Scheme (SCSS) | Post-retirement income | ~8.2% | Low |
*Past performance does not guarantee future results. The returns mentioned are subject to market risks.
How much should you save?
A rough rule of thumb:
Aim for a retirement amount of 20–25 times your annual expenses when you retire.
For example:
- If your annual expenses today are ₹6 lakh
- Considering inflation, in 25 years it could be ₹15 lakh/year
- You’ll need roughly ₹3 crore–₹4 crore to live comfortably.
Tools like retirement calculators can help you personalise this number based on your lifestyle and goals.
Let us see through an example:
Suppose you currently spend ₹40,000 a month.
You plan to retire in 30 years.
At 6% annual inflation, here’s how your monthly needs will look:
| Today’s Monthly Expense | Years to Retirement | Expected Monthly Expense at Retirement (6% Inflation) |
|---|---|---|
| ₹40,000 | 30 | ₹2,30,000+ |
Now multiply that by 12 months and 25 years (assuming you live 25 years post-retirement). You’ll need a sum of around ₹7 crore or more.
Tax Planning: Choose products that help you save tax while building your retirement corpus. (Example: NPS offers an extra ₹50,000 deduction under Section 80CCD(1B)).
Final Thoughts
Retirement isn’t the end of the road.
It’s a new chapter where you finally have the time to live on your own terms.
But financial freedom during retirement doesn’t happen by accident. It happens by planning today.
The earlier you start, the less you have to save every month.
The later you start, the harder you have to run to catch up.
Your future self will thank you for every smart step you take today.
So don’t wait for the “right time” — start building your retirement plan now. Your golden years deserve to be truly golden.
Disclaimer: This article is intended solely for informational purposes. The views expressed in this article are personal. Axis Bank and/or the author shall not be liable for any direct or indirect loss or liability incurred by the reader arising from reliance on the content herein. Readers are advised to consult a qualified financial advisor before making any financial decisions. Axis Bank does not endorse or guarantee the accuracy of any third-party content or links included in this article.
Mutual Fund investments are subject to market risk. Please read all scheme-related documents carefully. Axis Bank Ltd. is acting as an AMFI registered MF Distributor (ARN code: ARN-0019). Any purchase of Mutual Funds by Axis Bank’s customer(s) is purely voluntary and not linked to availment of any other facility from the Bank. This content is for informational purposes only and does not constitute investment advice. Past performance is not indicative of future returns. Readers are advised to consult a qualified financial advisor before making any investment decisions. Terms and Conditions apply.
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