4 hrs ago
Longer Lives, Rising Healthcare Costs Reshape Retirement Planning in India
People are living longer than they did in the past.
This means their retirement savings may need to last for 25 to 30 years.
Saving a fixed amount of money is not enough if prices keep rising.
Healthcare costs may increase faster than everyday costs.
Therefore, retirees may need a much larger savings cushion than they first expect.
Couples should plan for the spouse who lives longer.
Younger people can consider some equity investments because they have more time to recover from market changes.
As retirement gets closer, investments should become safer and easier to access.
Most importantly, people should save regularly and avoid spending their retirement money early.
India’s average life expectancy rose from 49.7 years in 1976 to 70.3 years in 2023.
Advisers recommend planning retirement finances through at least age 85–90, particularly for couples and longer-living spouses.
Healthcare costs are estimated to rise at nearly twice the rate of general inflation in India.
Accounting separately for healthcare inflation could make a retirement corpus 60–70% larger than a single-inflation estimate.
Advisers recommend consistent saving, long-term EPF or NPS contributions, and gradually reducing equity exposure near retirement.
- Who
- Indian workers, retirees, couples, and financial advisers including Harendra Zatakia and Harsh Vardhan Dawar.
- What
- Financial advisers are urging people to build and stress-test larger retirement corpora because people are living longer and healthcare costs are rising rapidly.
- Where
- India.
- When
- The article cites life-expectancy data from 1976 and 2023 and discusses planning for retirements lasting 25–30 years, potentially through ages 85–90.
- Why
- Longer lifespans, faster healthcare inflation, and reduced reliance on extended family support may require more retirement savings.
More Conservative Approach
Long-Term Equity Exposure
Investment allocation
More Conservative Approach
Conservative investors can rely on Employees’ Provident Fund savings and gradually shift investments toward safer assets as retirement approaches.
Long-Term Equity Exposure
Younger investors may still need some equity because their investment horizon can span 25–30 years, while National Pension System allocation can reduce equity exposure with age.
Retirement priority
More Conservative Approach
The priority is preserving accessible funds near retirement and reducing the risk of losses shortly before withdrawals begin.
Long-Term Equity Exposure
The longer time horizon allows younger investors to pursue growth through some equity exposure before adopting a more defensive allocation.
Key facts
- Life expectancy in 1976
- 49.7 years
- Life expectancy in 2023
- 70.3 years
- Suggested planning age
- At least 85–90
- Potential retirement duration
- 25–30 years for a 30-year-old today
- Healthcare inflation
- Estimated at close to twice general inflation
- Potential corpus increase
- 60–70% above a simple single-inflation calculation
- Suggested instruments
- Employees’ Provident Fund and National Pension System
Quotes
Harsh Vardhan Dawar
Founder of Wealth Cafe Financial Advisors
““If someone plans their retirement corpus assuming a flat, single inflation rate across all expenses, they could fall short by a wide margin, potentially needing a corpus that's 60–70% larger than a simple, one-rate calculation would suggest, once healthcare is properly accounted for. In rupee terms, for someone in this example, that gap can easily run into several crores of additional corpus by the time they retire,””
livemint.com
““We also need to remember that women generally live longer than men. So retirement planning is not simply about “How long will I live?” but “How long will my family need this corpus?” For a couple, the financial plan should account for the longer-living spouse,””
livemint.com
Sources
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