Achieve Freedom from All Your Retirement Worries

We often hear about how the youth population as a share of total population is a major strength of the Indian economy.

By: D. P. Singh
Deputy MD & CBO, SBI Mutual Fund

This cannot be disputed. However, I would like to draw your attention to how the situation is likely to change over time. By mid 2050s, the scales are likely to be tilted and a larger number of our compatriots are likely to be 'senior' than the younger ones.

With the Indian economy going from strength to strength, it is the right time for us to collectively, and individually, think about retirement and our plans around it. For now, let us focus on how it can be handled at an individual level.

The realistic yet humbling calculations

Picture this. You are a 30-year-old individual planning to retire at age 60. At present, you have Rs 50,000 monthly expenses and you have already saved Rs 5 lakh so far. Now, let us assume that the inflation will average around 7% in the future.

In the past 20 years, the Nifty 50 Index has given an annualised return of over 17%. However, another fundamental reality is that past performance cannot be a guarantee for future returns. Hence, for calculations for a critical financial goal like retirement, we have assumed a conservative return of 9% for the returns over the next 30 years. We have also assumed life expectancy of 80 years.