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Is Rs 1 Crore Enough For Your Retirement?

What is your dream figure for a comfortable retirement? - 1 crore or 5 crores. While you might feel mentally satisfied after picking a random big number, it may not be able to give you the desired comforts throughout life after you retire from work. Inflation and taxes* are the two major hurdles towards retirement in India. There is no way you can avoid either, but by working on real numbers, you can factor in ‘inflation’.
 

You must perform real calculations while planning retirement, so there isn’t a shortage of money later. Inflation is the biggest enemy eating up your return on investments every day.
 

How Much Money is Enough for Retirement?
 

If you ask anyone how much money is enough to retire comfortably, there is no one size fits all answer. Every individual must calculate as per their lifestyle. Many factors like current standard of living, expected standard of living after retirement, the number of years the person is expected to live after retirement, health record, liabilities due for payment after retirement, and more require consideration.
 

Imagine life 30 years from today. You have worked hard to fulfil your goals, and your children have received the best education possible. You have retired and mostly spend time with friends, relatives, and grandchildren. You have a healthy lifestyle with no such office routine, hectic schedules, deadlines to meet, work pressure, etc.
 

While the scenario sounds great, its possibility largely depends on your financial position upon retirement. To lead a happy and prosperous life, you need money. Therefore, you must focus on investing in the right retirement plans in India to enjoy its benefits in the later years of your life.
 

Retirement Planning
  


Planning your retirement in India is a complex process. You need to crunch heavy numbers. Moreover, there is a lot of uncertainty attached to the factors impacting it. For example, inflation, growth of the economy, returns from investments, job security, rising medical expenses, and job security are some factors that influence your financial planning for retirement.
 

The Figure of 1 crore
 

A lot of people want to earn an income in crores so that they do not have to worry about their retirement. If you consider basic utility bills, most people spend a few thousand rupees each month just on electricity, water, and other essential facilities. If you add some other expenses such as your child’s higher studies, a new business venture after retirement or other dreams and goals of your family, this amount can easily escalate into a few Lakh.
 

Before you start answering the question, you need to accept the golden rule of retirement planning - there is never enough. There are medical expenses to incur, rising inflation to beat, and several other unknowns that require funds.
 

To arrive at an appropriate answer, you need to guess parameters like growth in savings, income, working life, and inflation. Here is an example to help with a better explanation.
 

Consider a person in their 30s with a monthly income of around ₹1,00,000. They spend an average of ₹50,000 per month on their living expenses.
 

If they want to retire at the age of 65 years, they will have about 20-30 years of active professional life ahead and will have to save money to lead a comfortable life until the next 20 years at least.
 

Here, apart from listing down what all expenses, financial goals, and emergencies the person and their family may have to face, it is equally important to factor in the inflation rate. The inflation rate, which is subject to fluctuation, can increase by the time one chooses to retire. Hence, when buying a retirement plan, considering all future financial needs along with the inflation rate is important. 
 

A suitable retirement plan should enable you to save in crores so that no matter what expenses come up during those years, you should be able to tackle them.
 

Is One Crore Enough to Retire?
 

In Sushil’s case, the answer to is 1 crore enough for retirement is no. While ₹1 crore seems like a huge number, it isn’t sufficient to survive in India due to high inflation and lack of social security.
 

Retirement planning isn’t easy, and as you make calculations, it is better to be conservative. There are chances that you will outlive the number of expected years. Similarly, the annuity rates may fall when you retire. Keep yourself prepared for these situations. It is always a good idea to save a little extra instead of falling short and repenting later.
 

After you know how much money is sufficient for your retirement, you can devise a suitable financial plan.
 

Conclusion
 

Start saving for your retirement as early and as much as possible. If you want to grow your wealth and earn significant returns, you must regularly invest with discipline. A Tata AIA Life Insurance policy is a good place to start.
 

L&C/Advt/2022/Dec/3255

Peaceful Retirement Awaits: Discover Your Perfect Pension Plan

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Tata AIA Life Insurance

A joint venture between Tata Sons Pvt. Ltd. and AIA Group Ltd. (AIA),  Tata AIA Life Insurance  is one of the leading life insurance providers in India. We post everything you need to know about life insurance, tax savings and a variety of lateral topics such as savings and investments in this space. You can access and read a host of different blogs, articles and pages at the Tata AIA Life Insurance Knowledge Center or get in touch with us with any queries or questions!

View all posts by Tata AIA Life Insurance

Frequently Asked Questions

Is retirement planning important?

Yes, retirement planning is important to spend the golden years of your life in a stress-free manner. It also ensures that your loved ones are protected even when you are not there.

Is 1 crore ideal for retirement?

There is no one amount that fits all when it comes to retirement planning. You must look at your liabilities, assets, income, expenditure, etc., to know the right amount that you need at the time of retirement. Also, while calculating, also factor in the inflation rate.

Disclaimer

  • Insurance cover is available under the product.
  • The products are underwritten by Tata AIA Life Insurance Company Ltd.
  • The plans are not guaranteed issuance plans, and they will be subject to Company’s underwriting and acceptance.
  • For more details on risk factors, terms and conditions please read the sales brochure carefully before concluding a sale.
  • This blog is for information and illustrative purposes only and does not purport to any financial or investment services and does not offer or form part of any offer or recommendation. The information is not and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action.
  • Please know the associated risks and the applicable charges, from your Insurance agent or the Intermediary or policy document issued by the insurance company.
  • Every effort is made to ensure that all information contained in this blog is accurate at the date of publication, however, the Tata AIA Life shall not have any liability for any damages of any kind (including but not limited to errors and omissions) whatsoever relating to this material.
  • *Income Tax benefits would be available as per the prevailing income tax laws, subject to fulfilment of conditions stipulated therein. Income Tax laws are subject to change from time to time. Tata AIA Life Insurance Company Ltd. does not assume responsibility on tax implications mentioned anywhere in this document. Please consult your own tax consultant to know the tax benefits available to you.