Retirement planning is an essential part of financial planning in India. As the population ages and the cost of living continues to rise, planning for retirement has become more important than ever. In this article, we will discuss why it is crucial to plan for retirement in India and how to get started.
Increased life expectancy
With advances in healthcare and medical technology, life expectancy in India has been steadily increasing. While this is great news, it also means that we will need more money to sustain ourselves throughout our retirement years. According to a report by the World Economic Forum, the average life expectancy in India is expected to increase from 69 years in 2020 to 74 years by 2050. This means that we need to plan for a longer retirement period.
Inadequate pension system
India’s pension system is inadequate, and social security benefits are not enough to cover all of our retirement expenses. While the government provides a pension scheme for employees in the organized sector, the majority of the workforce in India is employed in the unorganized sector, and they do not have access to a pension scheme. This makes it even more important to plan for retirement and save for our future.
Rising cost of living
The cost of living in India is continuously increasing, and inflation is a significant concern for retirees. According to the Reserve Bank of India, the average inflation rate in India over the last ten years has been around 6% from 2012 until 2023. To maintain our current standard of living in retirement, we need to have enough savings to keep up with the rising cost of living.
Freedom to pursue passions
Retirement is an opportunity to pursue hobbies, travel, and spend time with loved ones. Having enough financial resources will enable us to enjoy this phase of life to the fullest. By planning for retirement, we can ensure that we have the financial freedom to pursue our passions and enjoy our retirement years.
So, how can we get started with retirement planning in India?
One way is to start early and take advantage of compound interest. By starting early, we can give our investments more time to grow, and the power of compounding can work in our favour. We can also consider investing in pension plans, annuity plans, insurance plans, mutual funds, and other retirement savings schemes.
It is also essential to have a clear understanding of your retirement goals and the lifestyle you want to maintain. This can help you determine how much you need to save and how you should invest your savings.
In conclusion
Retirement planning is crucial for financial security and the freedom to enjoy our retirement years in India. By starting early and investing in retirement savings schemes, we can ensure that we have enough savings to meet our future expenses. Let us all take a step towards securing our future by starting to plan for our retirement today.