A Comfortable Retirement Will Be A Challenge For Most Indians. And Here's Why

The first sentence of the title of this article may seem scary or discouraging. But the harsh truth is that this is a fact. And there are a number of reasons why this is so. But the silver lining is that most of these reasons are tied to our general approach to retirement planning. So it is very much in our hands to tackle this challenge. Therefore in today's article I will be highlighting the major reasons why a comfortable retirement would be a challenge for most individuals. I will also suggest measures to work around each of them. 

Late Starts And Low Savings Rates

The fact of the matter is that most Indians simply do not save enough for retirement. Most may also not begin investing early enough for retirement. It takes most people close to 30 years to comfortably build an adequate retirement corpus. The normal retirement age in India is now progressively tending lower towards 55. Life expectancy in India is tending towards 90. This means that the average Indian can realistically expect to spend 35 years in retirement (90-55). 

The concept of zero real returns asserts that individuals must save 50% of their annual post tax income for retirement. This would be true provided the number of years until and after retirement are equal to each other. This implies that the ideal age to begin investing for retirement today is 25 (55-30), not 30 or 35. It would not be realistic to expect today's youngsters to begin investing for retirement at age 25. Most of them may also lack the ability and/or maturity to do so. 

Not much can be done in cases where the individual lacks the ability to invest the required amount. This could be down to a number of reasons (low income, familial responsibilities, outstanding loans and so on). But there are a considerable number of youngsters and individuals today who are not tied down by such constraints. Such people should definitely make a conscious effort to invest the required amount for retirement. It requires a lot of maturity to forsake today's comfort for tomorrow's security. But that is one of the central demands for a comfortable retirement. Those who can meet it are likely to be well rewarded in the long run. 

Getting Disillusioned By The Challenge 

This is common among individuals who may have started investing for retirement later than they could afford to. The required savings rate of 50% at age 25 would be daunting enough in itself for most individuals. The situation only becomes more challenging the later we begin investing for retirement. Those starting at say age 30 would need to invest significantly more than 50% of their lifetime post tax income to retire at age 55. To understand the logic behind this statement check out my earlier articles What's Your Percentage? and Retirement Investing - I : The Accumulation Phase. 

Such numbers usually come across as an insurmountable challenge to those required to stump up such amounts for retirement. They therefore tend to procrastinate at the start of the process or give it up entirely. Doing either of these is equally dangerous. It would make an already herculean task even more challenging. 

The most logical solution to this issue is to stop fixating on the target corpus or investment account required. We can just invest as much as possible each month for a start. This needs to be coupled with gradual increments in our savings rate, at least annually. Over the years, this gives us a fair chance of building a reasonable retirement corpus. There is a very real chance that we would still end up well short of where we need to be. But we must remember that a glass that is half full is better than one that is completely empty. 

Blind (And Misguided) Faith In Finfluencer Math

Finance influencers on social media (popularly known as finfluencers) are seemingly an accessible source for financial planning advice today. But this ease of accessibility comes with two major caveats. Firstly, content released by finfluencers is mainly meant for a broad audience. It is therefore unlikely to offer personalised context to those consuming the content. 

Also, such content and/or the channels through which it is disseminated are usually sponsored by third parties. This means that finfluencers typically get paid in advance for the content they put out. Their content is therefore likely to be geared towards engagement (in terms of likes, shares and subscribers) rather than education. Their content is therefore likely to lack accountability. Honest, practical views typically do not garner much attention without being doubted or criticised. Their views expressed in such content typically tend to be overly optimistic. 

Now here is the real danger for us as consumers of such content. Overly optimistic views can make the math behind even the most challenging goals seem overly simple and attainable. Anchoring ourselves to such views is likely to give us a false sense of security. We are therefore likely to invest a lot less than we need to for retirement. But that would not change the gravity of the challenge at hand. If a comfortable retirement was attainable that easily, we would not have needed finfluencers or their content in the first place. And every second individual would be retiring comfortably on their own terms. But that is far from the case in the real world. Waking up to this fact would help us understand the true relevance of such content. 

Of course this is in no way meant to be a pervasive judgement on finfluencers or the quality of their content. There are definitely some who have made a name for themselves putting out honest and responsible content. But such cases are more the exception than the norm. The onus therefore falls on us to consume publicly available content on personal finance responsibly. 

Lack Of A Holistic Understanding Of Capital Market Dynamics 

Indians have never really been able to fully understand the capital markets. The previous couple of generations almost entirely avoided the capital markets. This was down to a lack of awareness and acceptance. The current generation is a lot more open to leveraging the benefits of the capital markets. But they still lack a holistic understanding of the capital markets. They therefore tend to have a number of incorrect perceptions regarding the way capital markets work. 

A prime example of this is the belief that equity as an asset class is guaranteed to beat inflation over the long term. The truth is that equity as an asset class has a reasonable chance of matching or beating inflation over the long term. This makes equity an essential component of portfolios for long term goals. But we must also appreciate that there is a material chance of equity failing to match inflation over the long term. 

Another example of this is reflected in the return expectations that individuals usually define for various asset classes. Take equity for example. Expectations of 15-20% CAGR over the long term are typically seen as the norm by investors. Such returns could have been deemed to be realistic a decade or two ago. Today it would be realistic to expect a long term post tax return of no more than 9-10% from equity. Return expectations from most other asset classes would also need to be lowered. The reason why I say this has been explained in an earlier article Understanding Asset Classes And Their Returns The Right Way. 

This implies that today's investors are unlikely to get away with investing less than they need to for retirement. A holistic understanding of capital market dynamics and various asset classes would help them realise why this is so. They must therefore first take the time to learn about these aspects. Investing for retirement should ideally succeed this step in the process. Doing this would help ensure that individuals build their retirement plans around a realistic and pragmatic premise.

Using Very Low Life Expectancy Estimates Post Retirement 

Most Indians typically expect to live until between the ages of 75 and 85 post retirement. But there is data available to show that the truth is entirely different. Annual data compiled by the World Health Organisation (WHO) and the United Nations World Population Prospects (UN WPP) report peg average life expectancy of Indians in 2026 at 71 years of age. But there are a couple of points to be noted here. 

The figure mentioned above is an average. A considerable portion of India’s population live in villages and towns. They may lack access to a standard of healthcare that covers anything beyond basic diseases. Child mortality in these regions also tends to be high. These factors are likely to bring the average life expectancy figure down. Those of us who have access to a reasonable standard of healthcare can typically expect to live until the age of 90 or even more.

It may even make sense for those in their mid 20s and early 30s today to plan for a life expectancy of 95 post retirement. This is as per a research study titled How India Thinks About Retirement published in February 2025. This shows that expecting to live until 75 or 85 may be unrealistic in today's times. 

Let us now understand how this impacts our retirement plans. Every retirement corpus is built with a central underlying assumption. The corpus is expected to be completely used up by the time the individual hits their assumed life expectancy. Assuming a life expectancy of 75 therefore means that the corpus would be used up by age 75. This leaves the individual vulnerable to the critical risk of outliving their corpus. This is technically known as longevity risk. Assuming a life expectancy of 90 or more fundamentally lowers longevity risk. Prudently prepared retirement plans therefore factor in life expectancy figures of at least 90.

Parting Thoughts 

In no way is this article meant to show that a comfortable retirement in India today is unattainable. It is to acknowledge the fact that retiring comfortably is a very real challenge in India today. The sooner we acknowledge the challenge, the faster we are likely to start working towards tackling it. Tackling this challenge is simple but not easy. It requires us to start early, save more, maintain conviction, make informed decisions and emphasise on pragmatism over blind optimism. Everyone can do each of these things. But very few will actually be able to. And that is where the real challenge lies.