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How to Plan Retirement Income in India? (2024)

Retirement Income in India

Retirement is a crucial stage in life because it represents the change from a routine focused on one’s work to one that is more laid-back and self-paced. Retirement income planning has become essential in India, where social security systems and the idea of joint families are developing. This article provides a systematic approach to How to Plan Retirement Income in India.

How to plan Retirement Income in India – Why to start early?

Age at starting SIP Monthly SIP Total amount invested till age 60 Accumulation at age 60
25 5000 21 Lakhs 3.21 Crore
30 5000 18Lakhs 1.75 Crore
35 5000 15 Lakhs 94Lakhs
40 5000 12Lakhs 49Lakhs
45 5000 9Lakhs 25 Lakhs
50 5000 6Lakhs 11 Lakhs
55 5000 3Lakhs 4 Lakhs

Understanding Retirement Planning

For non-resident Indians who want to guarantee a safe and comfortable retirement during their golden years, retirement planning is crucial. Like any other person, NRIs must carefully weigh a variety of factors when determining their retirement objectives and the best way to reach them.

It’s crucial for NRIs wishing to prepare for retirement income in India to make careful plans to guarantee a safe future. Making educated decisions about choosing the best retirement plan can be achieved by taking into account variables such as desired lifestyle, inflation, healthcare costs, and living expenses. NRIs can attain financial independence and retirement peace of mind with careful planning and disciplined saving.

Why is Retirement Planning Important?

  • Financial Independence: By preparing for retirement, you can become financially independent and ensure that you won’t need financial assistance from others when you’re retired.
  • Maintaining Lifestyle: You can preserve the same standard of living you enjoyed while working, without sacrificing your goals and ambitions, by carefully calculating your retirement income.
  • Medical Expenses: The cost of healthcare tends to rise with age. Making wise retirement plans guarantees that you will have enough money saved for emergencies and medical bills.
  • Inflation: NRIS needs to think about how inflation will affect their savings. Money loses value over time due to inflation, which reduces its purchasing power. It can be a smart decision to invest in India if you want to protect your money and keep a steady retirement income. You can safeguard a better financial future and preserve your wealth by investing in assets that have the potential to increase in value and outpace inflation.

How to Plan Retirement Income in India?

  • Determine the maturity of every investment you have, including life insurance, FDs, NSC, PPF, and EPF.
  • Deduct the sum from the total required retirement corpus at the end.
  • Find out the amount of the shortfall.
  • Consider the money you receive from rentals.
  • Set up a SIP that is comfortable for you.
  • Take a portion of any extra money you receive and invest it toward your retirement fund.
  • Anytime there is a raise in salary, an increase in the SIP amount,

Where Should I Invest for Retirement Income in India?

Ideally, you ought to begin making SIP investments in mutual funds. Your SIP money should be divided among four to five reputable mutual funds. Remember to invest in a variety of schemes across various mutual fund categories, such as large-cap, multi-cap, mid-cap, small-cap, balance-cap, and others. This approach raises the possibility of receiving better returns while lowering risk.

Factors to Consider While Planning Retirement Income in India

  • Expected retirement age and investment horizon: It’s critical to assess your anticipated retirement age and make appropriate plans for the future. When creating a retirement strategy, one needs to take into account their current age, their anticipated retirement age, and their investment horizon. 
  • Risk appetite: A person’s risk tolerance is probably higher when they begin retirement planning early than when they start later. Then, they can put their money into potentially riskier but higher-returning assets like stocks. 
  • Current financial situation: The current financial state of an individual, including their expenses, way of life, and any debts they may have, is another factor that needs to be taken into account when planning for retirement. This will make it easier to determine how much retirement savings are required. 
  • Spending on retirement needs: Although it may seem unrealistic, it is crucial to budget for several costs, such as housing, healthcare, and other potential expenses associated with aging. Assisting in the development of an all-encompassing retirement plan for the future might benefit from figuring out these costs.
  • Asset allocation plan: Additionally, an investment may yield lower returns, especially in the event of higher inflation. An individual can seek advice from an asset allocator after assessing their investment objectives, time horizon, risk tolerance, and related requirements. 

What are the Best Investment Options Available for Retirement Income in India? 

  • Pension Plans: Financial institutions offer valuable retirement savings products called pension plans. With these plans, people can save a percentage of their earnings while they’re still employed. After that, the money deposited is invested and grows over time. This amassed money provides NRIs with a steady stream of monthly income after retirement.

When it comes to receiving payouts, NRIs have two choices. Lump Sum payout allows non-resident individuals to contribute a sizable amount once to a pension account, which will subsequently produce a consistent monthly income in retirement. The Regular Pay Pension Plan, on the other hand, enables NRIs to contribute regularly over time, guaranteeing a steady and predictable monthly income stream following retirement.

Defined benefit plans and defined contribution plans are the two categories into which pension plans fall. A defined benefit plan provides retirement income guarantees from the employer based on various factors, such as years of service and salary. A defined contribution plan allows an individual to make contributions, the total of which is determined by the performance of the investments.

  • National Pension Scheme (NPS): In India, the government supports a retirement savings program called the National Pension Scheme (NPS). People can use the NPS to contribute a portion of their income to their Pension Fund Regulatory and Development Authority (PFRDA) managed pension account. Individual contributions are placed in a variety of financial instruments, with the potential for long-term growth, including stocks, bonds, and government securities.

When members reach retirement age, they can take out a portion of the corpus in one lump sum and use the balance to buy an annuity plan, which pays out regular pensions.

  • Stocks and Bonds: Increasing your retirement savings through stock and bond investments can be a successful strategy. Bonds are government or corporate-issued debt securities, whereas stocks represent ownership in a company. To minimize risks and optimize possible returns, it’s critical to diversify your investment portfolio.
  • Real Estate Investments: Investing in real estate has the potential to increase in value over time and yield consistent income. As part of your retirement portfolio, think about putting money into rental properties or real estate investment trusts (REITs).

FAQ of How to Plan Retirement Income in India

Q1. In what amount should I set aside for retirement?

Several factors, such as your intended lifestyle, anticipated expenses, and current income, will determine how much you should save for retirement. It’s generally recommended to set aside at least 10% to 15% of your retirement income in India.

Q2. In India, are there any tax advantages connected to retirement planning?

In India, there are, in fact, tax benefits for retirement planning. Tax deductions are available for contributions made to programs like the Employee Provident Fund (EPF), National Pension System (NPS), and Pension Plans.

Q3. Can I modify my retirement plan if my situation changes?

Indeed. Because life is unpredictable, things can change. To make sure your plan for retirement income in India is in line with your goals and current financial situation, review it regularly and make any necessary adjustments.


This article provides a comprehensive guide on strategic steps for planning retirement income in India. It emphasizes the importance of early planning, taking into account factors such as age, monthly SIP investments, and the total amount invested until retirement age.

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