What Is Pre-retirement Planning In India?

We are no stranger to the "the early bird catches the worm" proverb. But did you know that this applies to retirement planning too? Retirement financial stability does not happen by itself. It takes planning, dedication, and, yes, money. Retirement planning necessitates a rigorous approach, but early retirement necessitates even more discipline.

Share on facebook
Share on twitter
Share on linkedin
What Is Pre-retirement Planning In India?

Retirement is frequently associated with old age. However, with many young individuals opting for early retirement in recent years, this phrase has taken on a new connotation. The new retiree generation is leaving employment and settling into retired life in their early 50s. As appealing as the thought of not working and living a peaceful lifestyle seems, it is a challenging objective to fulfill. The sooner you retire, the less time you have to save and invest for a comfortable and secure post-retirement life.

Also read: The Simplest Guide to Retirement Planning You’ve Ever Heard.

Retirement meant hanging up your boots at the age of 60 just a decade ago. Today, Indians are not afraid to take a permanent hiatus from employment in their late forties or early fifties. This shift gets driven by two factors: millennials adopting the FIRE idea and preferring activities to merely working to the end of their lives. The FIRE idea denotes a decision to pursue financial independence and retire early. It gets fueled by millennials actively seeking work in the private sector. It is different from their predecessors, who mostly are government employees with fixed retirement ages. Starting a business or traveling has taken center stage, and many Indians are trying to retire early to follow their interests with ease.

However, retirement planning is more than just saving money. According to a recent poll, the present generation of Indian retirees regrets not saving enough money in their lives. In addition, people who are presently planning for retirement anticipate saving for at least six years longer than their predecessors. Proper retirement planning should take into account both financial and psychological requirements. Retirement planning is also important since Indian demographics show an increase in life expectancy, an increase in nuclear households, and the absence of a social security system. Nonetheless, retirement accounts constitute only a modest portion of total savings.

Also read: Best Retirement Plan for NRI in India 2020 – Retirement Planning for Future.

So, what defines pre-retirement planning?

Retirement planning entails planning ahead of time for your future life so that you may continue to achieve all of your goals and objectives on your own. Setting your retirement objectives, predicting how much money you will need, and investing to increase your retirement savings are all part of this process. Pre-retirement planning is a goal-oriented process in which people make efforts to prepare for their retirement life. This process allows retirees to form realistic anticipation of the changes during the transition. It also helps them establish a long-term aim for living after retirement. Pre-retirement preparation is a broad word, such as self-perceived retirement readiness. 

What is the value of Pre-retirement planning?

The majority of individuals adore the goal of becoming financially independent and living a quiet and pleasurable life in their elderly years. It necessitates significant funds and a well-thought-out retirement strategy. During your working life, you can cover your regular costs with your wages. But, after retirement, you will need to pay for your expenses for at least 30 to 35 years because there will be no source of regular revenue.

Retirement planning is particularly vital because the average life expectancy in India continues to climb, working forever is unrealistic, and you may have to stop working due to health or other reasons at some time. Furthermore, medical expenditures, which will account for a sizable amount of your retirement spending, are on the rise.

Consider the following example: a 30-year-old with current monthly costs of Rs. 50,000, will require about Rs. 2,87,174 per month to fulfill his expenses when he is 60 years old (considering inflation at 6 percent ).

What are the benefits of pre-retirement planning? 

Now that we understand the value of pre-retirement planning, let us dwell more on how it can benefit you. These seven advantages of early retirement preparation may entice you to begin your retirement planning as soon as feasible if you do not already have one.

  • Tax-free: One of the most significant advantages of having an early retirement plan is the tax benefits. You may save money on taxes by investing your earnings in implausible retirement plans. In addition, retirement plans allow you to diversify your tax payments.
  • Safeguarding of assets: You do not need to sell your assets to increase your retirement income. You may avoid relying on your possessions by investing in a retirement plan. As a result, early retirement planning can help you safeguard your future.
  • Better returns: You gain less advantage from putting your money in the bank. However, investment alternatives allow you to enhance your profits by providing higher returns. Thus, investing in retirement plans yields a return than investing in a bank.
  • Compounding value: We all believe we can construct a sufficient retirement fund by saving a portion of our salary. However, because we do not account for inflation, that is an ineffective approach. The power of compounding contributes to a larger retirement corpus.
  • Curbs unprecedented expenses: A retirement fund can assist you in surviving unexpected medical emergencies. Having a retirement plan allows you to access cash as needed. Remember that as you become older, your medical bills will inevitably arise.
  • Aids to the dependants: You can support your dependents if you have a solid strategy in place. Retirement plans provide financial stability to your dependents by acting as a financial buffer. With careful financial preparation, you may assure that there is no income loss after retirement.
  • Maximum benefits: To get the most out of your retirement plan, you must start early. Beginning to invest in your early twenties is the option for an early retirement strategy. It extends the tenure and allows you to pay lesser rates. However, if you start in your late twenties or early thirties, you may make a difference by bridging the gap. Determine your retirement age and needs, and then begin saving in a retirement plan.

Now, what are the best pre-retirement investment options?

When preparing your retirement funds, you must take into account issues such as monthly spending and inflation. Begin investing early to plan for a well-funded retirement.

Also read: Retirement Portfolio 101: 7 Investment Options You Must Include.

There are several fantastic pre-retirement investment opportunities that you may invest.

  • Real estate: Real estate investments provide a dual advantage of capital appreciation plus continuous rental payment flows. As a result, they are an excellent retirement investment since the rental income replaces the monthly payments up to a set proportion. Furthermore, the leverage to acquire real estate can help you save taxes by deducting the interest payment on let-out properties. It can also assist and increase contributions to the Corpse retirement investment fund. One can also invest in fractional real estate ownership for pre-retirement planning

  • Stock market: The equities asset class is the riskiest, but it also has the potential profits. This risk gets mitigated by distributing funds over a lengthy period. Individuals with less financial responsibility can invest a number of their assets in the stock market. Those with financial responsibilities can invest a lesser percentage in the stock market to hedge against volatility.

  • Mutual Funds: In retirement planning, mutual funds are the most popular asset class. With the benefits of monthly investment plans, long-term parking of assets handled by specialized asset managers, and diversification options within the fund into equities, debt, and money market, they may deliver average returns of 8 to 15%. Mutual funds’ compounding impact is the most important aspect of long-term fund multiplication.

When your anticipated retirement date is a decade away, it may appear remote. However, pre-retirement planning is an important step to ensure you financially prepare for your golden years. It is critical to plan wisely and establish reasonable objectives so that time works in your favor and you have the resources to enjoy the retirement you have always desired.

Even if you began saving and investing for retirement late or have yet to begin, it is essential to know that you are not alone. There are actions you can take to enhance your retirement savings. 

Also read: 5 Retirement Strategies to Keep in Mind as a Late Starter.

Assetmonk is India’s fastest-growing wealth-tech platform that curates real estate assets that will help you sort out your retirement plan. The assets generate steady passive income and returns in the form of capital appreciation and rental income. Visit their website to explore real estate investment opportunities starting at INR 10 lakhs. 

Early Retirement FAQ'S:

Early retirement seems appealing, but it also implies that, due to financial commitments, you will have to quit working at the age of 40 or 45. According to industry experts, without sufficient preparation, it is nearly impossible, at least in India. Thus, detailed pre-retirement planning is important.

The procedure for early retirement are as follows.

  • Early planning
  • Investigate your retirement budget.
  • Set a retirement fund target.
  • Begin saving as soon as possible
  • Invest in Financial Instruments That Meet Your Requirements
  • Purchase Health Insurance
  • Reduce Debt

Related Articles

istockphoto 1313421433 612x612 1

Pradhan Mantri Kisan Samman Nidhi Yojana

What is the Pradhan Mantri Kisan Samman Nidhi Yojana? The Pradhan Mantri Kisan Samman Nidhi Yojana is a plan initiated by the Indian government. It gives income help of as much as Rs. 6000/- annually to all marginal and small farmers. Families of land-owning farmers receive an Rs. 6000/-  cash advantage a year under the Pradhan Mantri Kisan Samman Nidhi Yojana plan. This amount will get paid Rs. 2000/- in 3 equal payments per 4 months. Also, read Saving Schemes in India. The Motive of the Pradhan Mantri Kisan Samman Nidhi Yojana? As we all know, agriculture is the backbone in the Indian economy. So, farmers are an important part of society. But, the economy has socioeconomic gaps between the urban areas with rural areas. So, farmers battle with long-term profitability. This problem has afflicted the majority of India’s people since its freedom. The state and federal governments have worked to solve this challenge. They have also introduced a variety…

Read more
istockphoto 951524746 612x612 1

Post Office Time Deposit

So, what is the Post Office Time Deposit Scheme? India Post provides the post office time deposit as a modest savings program for Indians. Post Office Time Deposit Scheme is a savings account investment provided by India Post. This program gets intended for depositors who desire to make a one-time deposit with an FD of 5-year which is a tax advantage. With a few exceptions, it is identical to a bank fixed deposit. People can create a post office time deposit account by approaching their closest post office or by utilizing India Post’s official app or website. India Post has been in existence since 1854. It is the most globally disseminated postal network, with over 1.55 lakh offices spread over India. Majorly known for mail delivery, India Post also offers these services: Small savings schemes. Postal Life Insurance and Rural Postal Life Insurance Instant money order E-money order. Mutual funds. Services for money transfer Also read Post Office Investments –…

Read more
istockphoto 1364622197 612x612 1


PPF Vs SSY: What is the difference between the two? Sukanya Samriddhi Yojana Account (SSY) and Public Provident Fund (PPF) are the safest investments. These are accessible to those desiring significant financial development with a low-risk component. So, if you wish to invest in any or both of these schemes, you would investigate and check. Financial objectives, risk tolerance, rate of interest, and versatility should all get addressed. Read SSY – Sukanya Samriddhi Yojana Benefits & Interest Rates. PPF Vs SSY PPF and SSY are solid investment options, although they differ in important ways. The Sukanya Samriddhi Yojana is a female child welfare plan. It helps to safeguard a girl child’s future. But, the PPF is a program that enables depositors to receive zero-tax interest. In India, the Public Provident Fund (PPF) plan provides a long-term investing choice. It provides high profits while also giving tax deductions to the investor. A PPF account may get created in any private or…

Read more
Small Savings Schemes

Small Savings Schemes

Small savings schemes are an excellent way to save money. They offer a good rate of interest and can be used as an alternative form of collateral for investments, bonds, and property. The following schemes are available throughout the country and are some of the most popular ones that you can consider: Post Office Time Deposit Scheme The Post Office Time Deposit Scheme (POSTD) is a small savings scheme launched by the Government of India to provide investment opportunities in the secondary market. The scheme was launched on 15th September, 2015. This scheme is popular in rural as well as remote corners of the country, where the people have limited access to other financial products or alternative investments. The Ministry of Finance sets the interest rates for this scheme based on the performance of government securities, which is generally spread across the yields of the government sector. For 2022, the rates of interest are 5.5%, 5.7%, 5.8%, and 6.7% for…

Read more
istockphoto 1033711098 612x612 1

UAN Helpdesk

What is the UAN helpdesk for PF account holders? UAN is a 12-digit Universal Account Number that is assigned to every PF account holder at the time of joining the first job. The PF number when allocated, is used for each organization through the use of UAN. The new PF identification number that the person is associated with is his UAN in each new company of which an employee is a part. UAN can be described as a code that is used to identify several PF account IDs for an individual participant. It serves as an umbrella for multiple PF IDs assigned to individuals by various organizations. Also read UAN Registration & Activation Process Online. What exactly is UAN Helpdesk? The Employee’s Provident Fund Organization, India has a separate helpdesk online for (Universal Account Number) UAN-related issues and complaints. Users can access the helpdesk online and resolve their issues on their own or contact the executive offline. Employees can also…

Read more
child saving scheme

Child Saving Schemes

A child is the most precious thing in your life, and it’s important that you take care of them. However, it can be hard to know how much money you should save for their future education, health, and insurance needs. There are many different types of child saving schemes available for parents who want to safeguard their children from financial difficulties later in life. Here are some examples: Sukanya Samriddhi Scheme The Sukanya Samriddhi Yojana is a child saving scheme specially made for girl children. It was launched by Prime Minister Narendra Modi on January 22, 2015. The objective of this scheme is to promote the financial inclusion of girls in India by incentivizing them to save money through the Sukanya Samriddhi account. The interest rate ordered by this scheme is 7.6% per annum, and the minimum and maximum investment amounts are ₹250 and ₹1.5 lakh per annum respectively. Also, the maturity period of the Sukanya Samriddhi Scheme depends on…

Read more