Search in Indianmoney's WealthPedia


RETIRE WITH PRIDE - 6 : Four Ways To Plan For Retirement

How much money do you think you need at retirement? A simple question for which you have no answer. With inflation soaring, even a retirement corpus of a crore, might not be enough. Today, job security is a pipe dream. Inflation is high and medical expenses are rising. In these uncertain times, retirement planning is a must.

Now, imagine a scenario where you do not plan for retirement. What will be your condition at retirement? Retirement planning is not difficult if you know how to do it. Retirement planning makes sure you enjoy a happy retirement. All you need to do is give us a missed call on 022 6181 6111 to explore our unique Free Advisory Service. is not a seller of any financial products. We only provide FREE financial advice/education to ensure that you are not mis-guided while buying any kind of financial products.

Make sure your retirement savings is 20 times your current annual expense

To plan for a happy retirement, you need to have a rough idea of how much you would spend after retirement. Yes….This is very important, as it gives you an idea of how much you need to save for retirement. After you retire you would not spend much on eating out, clothes and entertainment. You would spend more money on medicine, transport and insurance.

Thumb rule to understand how much you need to save for retirement:

Add up all the expenses you are likely to incur after your retirement (you have to estimate a bit). This will give you an idea of how much you need each month. You multiply this amount by 240. This is the amount you need to set aside for retirement.

Before you apply this thumb rule

  • Pay back all borrowed loans before you retire.
  • Avail sufficient health insurance for you and your spouse. Medical expenses are quite high after you retire.

Increase your investments as your salary grows

You get that raise each year. Sometimes you get a 15% pay hike. Sometimes its 20%. Then there’s an occasional bonus. You have invested money in good financial products for your retirement. Your salary goes up each year. Has your investment towards retirement also kept up, or is it still the same?

Cost of living increases each year because of inflation. Inflation is the rise in the prices of goods and services with time. Yes….Inflation has eaten up most of your pay hike and bonus. But…you still need to increase your investments, so that they match your increase in income.

Follow this thumb rule when you make investments for retirement

Save at least 10% more than you saved in the previous year, so that you beat inflation and have a sufficient retirement corpus to enjoy retirement.

Invest in equity for retirement

Yes….equity is considered a very risky tool to invest your money. Believe me….It is….but only if you invest for a very short time. In the long run, equity is safe and an excellent investment. Retirement planning is done over 15 to 20 years. This makes equity an excellent tool to invest, for retirement planning. Now the big question. How much should you invest in equity for retirement?

Follow this simple thumb rule:

  • 100 —Age = Your allocation to equity.

At 25, you need to have 75% of your portfolio in equity. As you grow older, safety of your investment is very important. At 45, you need to have only about 55% of your portfolio in equity. Gradually reduce the equity in your portfolio as you grow older. Age is not the only factor, which determines the percentage of equity in your portfolio. Your salary is equally important. If you earn a good salary, you can take a higher risk for a higher reward. You are able to take a higher risk than your age permits, just because you earn a good income.

Never raid your retirement corpus

You always need money in a hurry. There is always some emergency…..a medical emergency…no money to celebrate your birthday…money for your child’s marriage….Yes, all these reasons are important enough to spend some money, but you also need to think of your retirement. If you keep raiding the money you have set aside for retirement, you lose the compounding benefit. What is this compounding benefit? The money you invest for retirement earns interest or gives good returns, which are reinvested and earn you more money. This increases the money you have at retirement. For your investment to earn good returns, it needs time. This is a long period where you do not touch your investment. If you keep dipping into your retirement fund, there is no money left to enjoy the compounding benefit.

This is a time to bring up another important discussion. You and several citizens, grumble about that forced saving called EPF (Employee Provident Fund). You have so many better ways to spend your money? But a few smart citizens have become crorepatis at retirement, simply by not touching the money in their EPF. The EPF gives you an opportunity to withdraw most of your money, if you are unemployed for more than two months, between jobs. Guess what….You and some smart citizens in our country actually withdraw this money, whenever you change jobs, even if you get a new job in less than a month. Not so smart a move after all….You simply deny yourself an opportunity, to get a crore at retirement.

What have you learnt from this article? If you don’t plan for your retirement, there is no one else to do the job for you. There is no money when you retire. You will have to go with a begging bowl to your children, relatives and friends. I’m sure you don’t want to see such bad days. Why not take the simple route? Just plan for your retirement and retire with pride.

Mr. C.S. Sudheer

Mr. C S Sudheer is the founder and CEO of – India’s largest Financial Education Company. He started his career with ICICI Prudential Life Insurance and later on worked with Howden India. After his brief stint in Howden India, he moved on and incorporated Suvision Holdings Pvt Ltd which is the sole promoter of He aims to build a nation that is financially literate with investment savvy citizens.

Related Articles/Videos

What is your Credit Score? Get FREE Credit Score in 1 Minute!

Get Start Now!

This is to inform that Suvision Holdings Pvt Ltd ("") do not charge any fees/security deposit/advances towards outsourcing any of its activities. All stake holders are cautioned against any such fraud.