Retirement Planning 101: Will You Outlive Your Money?

The biggest financial risk today is not dying too early, but living too long without enough money. Here is how to plan your second innings.

By Finance Editor•Updated: 2 February 2026

In India, the joint family system is shrinking. Medical science is advancing, increasing life expectancy. If you retire at 60 and live till 85, you have 25 years of unemployment to fund. This requires serious planning.

1. The Silent Killer: Lifestyle Inflation

If your monthly household expense is ₹50,000 today, how much will it be after 20 years?

At 6% inflation, it will not be ₹60,000. It will be ₹1.6 Lakhs per month!.
To survive in retirement, your savings must grow faster than inflation. Keeping money in a Savings Account (3% return) ensures you become poorer every year.

2. The 3 Phases of Retirement

  • Accumulation Phase (Age 25-60): You work, save, and invest aggressively. High Equity exposure recommended.
  • Transition Phase (Age 55-65): You shift from risky assets to stable income-generating assets.
  • Distribution Phase (Age 60+): You start withdrawing from your corpus (SWP) to fund expenses.

3. Where to Invest for Retirement?

1. EPF / PPF

The bedrock of retirement. Guaranteed, safe, tax-free. But returns (7-8%) act only as a hedge, not a wealth creator.

2. NPS (National Pension System)

Market-linked. You can choose up to 75% equity. Low cost. Great for building a large corpus.

3. Equity Mutual Funds

The engine of growth. Over 15-20 years, equity outperforms all other asset classes. Essential for beating inflation.

4. Real Estate

Good for psychological security (own home), but poor for generating monthly income (rental yields are low, only 2-3%).

4. The Withdrawal Strategy (SWP)

Instead of buying a low-return annuity plan, smart investors use Systematic Withdrawal Plan (SWP) in Mutual Funds.

  • You keep your corpus invested in a balanced fund.
  • You withdraw a fixed amount monthly.
  • The remaining money continues to grow.
  • This is highly tax-efficient compared to FD interest.

Conclusion

Retirement is the only financial goal you cannot get a loan for. You can get a loan for a house, car, or education, but no bank will lend you money for your retirement. Start investing today.

Need to know your retirement number? Check the Goal Planner or Gratuity Calculator.

Frequently Asked Questions

What is the 30x Rule?

A simple rule of thumb: You need a corpus roughly 30 times your annual expenses to retire comfortably. If you spend ₹10 Lakhs/year, you need ₹3 Crores.

Is NPS good for retirement?

Yes, the National Pension System (NPS) is a low-cost, government-backed market-linked product that creates a retirement corpus and offers tax benefits u/s 80CCD.

Should I buy an annuity plan?

Annuity plans provide guaranteed monthly income for life but offer low returns (5-6%). They are good for a basic safety net but poor for inflation protection.