Financial Planning: 1 Crore May Be Not Enough For A Comfortable Life Post Retirement

People often ask how much savings is enough for a comfortable life after retirement in India. It has been a general assumption that Rs 1 crore is enough to make ends meet after retiring from the job. But because of inflation, the situation has changed.

Rs 1 crore today will significantly lose its value over time. For instance, with a 6 per cent inflation rate, Rs 1 crore would be worth only Rs 55.84 lakh in 10 years and Rs 31.18 lakh in 20 years.

To combat inflation, it's essential to invest in assets that yield returns higher than the inflation rate, such as stocks, real estate or bonds. Early planning and diversified investments are crucial to ensure financial security in the long run, NDTV Profit reported.

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Once it was, but now Rs 1 crore is not the amount to set as an ultimate goal, it's just a pit stop. According to the India Retirement Index Study (IRIS) by Max Life Insurance (IRIS 4.0), only 44% of respondents believe retirement planning should start before the age of 35, highlighting the need for greater awareness and planning.

To build a corpus of Rs 1 crore or more, people consider a monthly SIP. For example, investing Rs 1,15,000 monthly for five years could help accumulate Rs 1 crore, assuming a certain rate of return.

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PPF investment will also help, as if someone invests Rs 1.5 lakh annually in a Public Provident Fund (PPF) for 25 years, it could yield over Rs 1 crore, given the current interest rate of 7.1%.

Another crucial benefit of PPF is that it is a long-term debt investment instrument and comes under the Exempt-Exempt-Exempt (EEE) category, which means investments are tax-exempt. The interest earned and withdrawals would also be tax-free. PPF also offers a guaranteed tax-free return.