Retirement Planning: Because Your Kids Have Their Own EMIs to Worry About
A no-nonsense (and slightly cheeky) guide to building your retirement corpus before your child books a one-way ticket to Canada.
Let's be honest. Somewhere between your child's first birthday and their MBA application, a quiet thought sneaked into your head: "Beta will take care of me when I'm old."
It's a warm, comforting thought. And also — with all due love and respect — a terrible financial plan.
Your child's dream may involve a startup in Bangalore, a PhD in the US, or a flat in Dubai with a 30-year home loan. None of those dreams have a line item called "fund Dad's retirement." And that's perfectly okay — because your retirement is your responsibility.
This post is your friendly nudge (okay, a firm push) to get serious about retirement planning. Let's break it all down — corpus, EPF, NPS, inflation — with real numbers and a little bit of humour, because crying about it isn't going to help.
Why Most Indians Get Retirement Planning Wrong
India has a deeply ingrained culture of family support. For generations, the assumption was simple: you raise your children, they support you in old age. But the world has changed dramatically.
Children move cities. They move countries. They get married and take on their own financial responsibilities. Property prices, school fees, and lifestyle costs have all gone through the roof. Expecting your child to fully fund your retirement is not just unfair to them — it's a risk you cannot afford to take.
There's also another uncomfortable truth: we are living longer. A 60-year-old Indian today can realistically expect to live until 80 or even 85. That's 20 to 25 years of expenses to cover — with no salary coming in.
Quick Reality Check: If you spend ₹50,000 per month today, you'll need roughly ₹1.5 crore just to fund 25 years of the same lifestyle — and that's before accounting for inflation. With inflation, you'll need significantly more.
What Is a Retirement Corpus — And How Big Should Yours Be?
A retirement corpus is simply the total pool of money you need to have saved by the time you retire, so that the returns from it can sustain your lifestyle for the rest of your life.
The most commonly used formula is the 25x Rule: multiply your annual expenses by 25. This is based on the idea that a well-invested corpus can generate roughly 4% per year — enough to cover your expenses without depleting the principal.
Example Calculation
| Monthly Expense (Today) | Annual Expense | Corpus Needed (25x) |
|---|---|---|
| ₹30,000 | ₹3.6 lakh | ₹90 lakh |
| ₹50,000 | ₹6 lakh | ₹1.5 crore |
| ₹75,000 | ₹9 lakh | ₹2.25 crore |
| ₹1,00,000 | ₹12 lakh | ₹3 crore |
But here's the catch — these are today's expenses. By the time you retire 20 years from now, the same lifestyle will cost considerably more. Which brings us to the monster under the bed.
Inflation: The Silent Retirement Killer
Inflation is the reason ₹100 today will feel like ₹40 twenty years from now. India's average inflation rate has historically hovered around 5–7% per year. At 6% inflation, your cost of living doubles every 12 years.
That means if you spend ₹50,000 a month today, you'll need about ₹1,60,000 per month to maintain the same lifestyle in 20 years.
📊 Inflation Impact at 6% Annual Rate
- ₹50,000/month today → ₹90,000/month in 10 years
- ₹50,000/month today → ₹1,60,000/month in 20 years
- ₹50,000/month today → ₹2,87,000/month in 30 years
This is why simply saving money in a savings account won't cut it. You need your investments to beat inflation by a healthy margin — which means you need to invest in instruments that offer real returns, not just nominal ones.
EPF — Your First Pillar of Retirement Savings
If you're a salaried employee, there's a good chance you're already contributing to the Employees' Provident Fund (EPF) — even if you've never thought much about it.
Here's how it works: 12% of your basic salary goes into your EPF account every month. Your employer matches this contribution. The current interest rate on EPF is around 8.15% per annum, making it one of the safest and most reliable long-term savings tools available to Indian salaried professionals.
🏦 EPF Key Facts
- Employee contribution: 12% of basic salary
- Employer contribution: 12% (split between EPF and EPS)
- Current interest rate: ~8.15% p.a. (FY 2023-24)
- Maturity amount: Tax-free if withdrawn after 5 continuous years
- Managed by: EPFO (Employees' Provident Fund Organisation)
The biggest mistake people make with EPF? Withdrawing it every time they switch jobs. That ₹5 lakh sitting in your old EPF account may not feel like much now — but left untouched for 25 years at 8%, it compounds to over ₹34 lakh. Don't kill the golden goose.
NPS — The Underrated Retirement Powerhouse
The National Pension System (NPS) is one of India's most powerful retirement tools — and one of the most underutilised. It's a market-linked, long-term pension scheme regulated by the PFRDA (Pension Fund Regulatory and Development Authority).
You can invest in NPS voluntarily (Tier 1 account), choosing how much of your corpus goes into equities, corporate bonds, and government securities. Historically, NPS equity funds have delivered returns of around 10–12% over the long term.
📋 NPS at a Glance
- Minimum annual contribution: ₹1,000 (Tier 1)
- Tax benefit: Up to ₹1.5 lakh under Section 80C + additional ₹50,000 under Section 80CCD(1B)
- Lock-in: Until age 60 (partial withdrawal allowed for specific reasons)
- At maturity: 60% lump sum (tax-free), 40% must be used to buy an annuity
- Who should use it: Anyone looking for long-term, disciplined retirement savings
The tax benefit alone makes NPS extremely attractive. The extra ₹50,000 deduction under 80CCD(1B) is over and above your Section 80C limit — so you can save up to ₹2 lakh in taxes annually just by maximising NPS contributions.
"My Son Will Take Care of Me" Is Not a Strategy
We need to have this conversation — warmly, but clearly.
The "my children will support me" plan has several critical weaknesses. First, your child may be living in a different city or country. Second, they may be managing their own EMIs — home loans, car loans, and children's school fees. Third, and most importantly, depending on someone else for your financial security removes your independence and can strain the most loving relationships.
There's a reason flight safety instructions say "put on your own oxygen mask before helping others." You cannot be a source of strength for your family if you are financially dependent on them.
And let's be clear — this isn't about love. It's about planning. Your child may absolutely want to support you. But wanting to and being able to are two very different things in today's high-cost world.
How to Start Your Retirement Plan — A Step-by-Step Approach
Step 1: Calculate Your Target Corpus
Estimate your monthly expenses at retirement (in today's terms), multiply by 12 for annual expenses, and then multiply by 25. Now adjust that number upward for inflation using an online retirement calculator.
Step 2: Check What You Already Have
Add up your EPF balance, NPS balance, and any mutual funds or FDs earmarked for retirement. This is your starting point.
Step 3: Calculate the Monthly SIP Needed
The gap between your current savings and your target corpus tells you how much you need to invest monthly. Use a SIP calculator (available on most mutual fund websites) to figure out the required amount assuming a reasonable return rate.
Step 4: Automate and Invest Consistently
Set up automatic deductions — SIPs in mutual funds, NPS contributions, EPF. Automation removes temptation and builds discipline without effort.
Step 5: Review Every Year
As your income grows, increase your SIP amounts. Financial planners recommend stepping up your SIP by 10% every year in line with income growth. This dramatically accelerates corpus building.
The Power of Starting Early: If you invest ₹10,000/month for 30 years at 12% returns, you'll accumulate over ₹3.5 crore. If you wait 10 years and invest ₹10,000/month for 20 years at the same rate, you'll get only ₹99 lakh. Time is your greatest asset in retirement planning — more powerful than the amount you invest.
When to Stop Googling and Talk to an Expert Instead
The internet is full of information about retirement planning — including this very blog post. And while self-education is valuable, there are situations where a qualified financial advisor is not optional, it's essential.
🚨 Stop Googling and Call a CFP When:
- You are within 5–10 years of retirement and haven't seriously started planning
- You have multiple sources of income — rental income, freelancing, business — that complicate your tax and savings picture
- You are self-employed or a business owner without access to EPF or employer-matched contributions
- You have inherited wealth or received a large lump sum (property sale, gratuity) that needs strategic deployment
- You're confused about how to allocate between EPF, NPS, mutual funds, real estate, and fixed deposits
- Your family has special circumstances — a dependent child with disability, a spouse with no income, etc.
- You are unsure about the tax implications of withdrawing from NPS, EPF, or mutual funds in retirement
- You want to retire early (before 60) — FIRE planning requires very specific and personalised calculations
Look for a SEBI-Registered Investment Adviser (RIA) or a Certified Financial Planner (CFP). Fee-only advisors (who don't earn commissions) are generally more objective in their recommendations.
📚 Sources & Data References
This article is based on publicly available data from credible government and financial institutions. All figures are for informational purposes only and should not be treated as financial advice.
-
EPFO — EPF Interest Rate & Contribution Rules
www.epfindia.gov.in -
PFRDA — National Pension System (NPS) Guidelines
www.pfrda.org.in -
RBI — Historical Inflation Data for India (CPI)
www.rbi.org.in -
Income Tax Department — Section 80C, 80CCD Deduction Details
www.incometax.gov.in -
SEBI — Registered Investment Adviser Directory
www.sebi.gov.in -
NPS Trust — Historical Performance Data
www.npstrust.org.in
This blog is intended for general educational purposes. Consult a SEBI-Registered Investment Adviser (RIA) or Certified Financial Planner (CFP) before making investment decisions.
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