Retirement Planning in India

Most Indian retirement advice starts with a fund and a SIP. That is the wrong end. Start with the number of years you must fund and the return you will earn after inflation. The product choice follows from that.

How much retirement corpus do I actually need?

Take your first year of retirement spending. Multiply it by the factor below for your assumed real return and the number of years you need the money to last. Real return means return minus inflation.

These are standard annuity present-value factors, computed by us. The formula is the same one behind the SWP calculator.

Work an example. Say you will spend ₹50,000 a month, so ₹6,00,000 a year. At a 2% real return over 30 years you need about ₹1,34,40,000. At 1% real you need about ₹1,54,80,000. That ₹20 lakh gap comes from one percentage point. It is the single most sensitive input in the whole exercise, and nobody can tell you the right value for it.

What is the real medical inflation rate in India?

Here two credible sources disagree, and you should know it.

Official statistics say health inflation is modest. In the April 2026 Consumer Price Index on the 2024=100 base, the Health group rose 1.64% year on year. Rural was 1.57% and urban 1.77%. Inpatient care services rose 1.85% overall, and 3.22% in urban India. Headline CPI over the same period was 3.48%. On those numbers, health cost less than the general basket.

Industry surveys say the opposite. Double-digit medical inflation figures circulate widely in Indian personal finance media. We could not trace any of them to an official statistical release, so we do not quote a number for them. They generally measure health insurance claim costs or hospital tariffs, which is not the same thing the CPI measures.

Both can be true. The CPI Health basket is dominated by household out-of-pocket spending on medicines and outpatient visits. It does not track your insurance premium. It does not track the specific procedures that dominate spending after 70. So use the official number as your floor, not your estimate.

How do I build medical inflation into the corpus?

Do not inflate the whole budget faster. That overstates your need badly. Split the budget instead.

Suppose ₹90,000 of your ₹6,00,000 annual spending is health related. Assume that line grows 4 percentage points faster than everything else, in real terms, for 30 years. It compounds by a factor of about 3.24. By year 30 it is about ₹2,91,900 in today’s money. That is roughly ₹2,00,000 a year of extra spending you did not plan for, appearing when your earning ability is zero.

The practical fix is not a bigger corpus. It is insurance held early and held continuously. Waiting periods for pre-existing disease run for years, so a policy bought at 62 is close to useless for the conditions you already have. Read how pre-existing disease waiting periods work before you rely on a late purchase. A super top-up bought young is the cheapest way to raise your cover ceiling — see top-up health plans.

What should the corpus be invested in?

The constraint most people miss is liquidity, not return. NPS is the biggest example. Under the PFRDA exit rules for the All Citizen Model, at 60 you must use at least 40% of the corpus to buy an annuity. Only 60% comes to you as a lump sum. Full withdrawal is allowed only if the corpus is ₹5,00,000 or less.

Exit before 60 is stricter. You need five years of membership, and at least 80% must go into an annuity. Full withdrawal applies only up to ₹2,50,000. Partial withdrawals are capped at 25% of your own contributions, three times in the whole tenure, and only for listed reasons such as illness, education or a home.

So NPS is not a flexible retirement account. It is a pension with a forced annuity leg. That leg is the weak part: Indian annuity rates are low and the payout is fully taxable as income. Treat NPS as one slice, sized deliberately, not as the plan. Our pages on NPS and annuity plans go into the numbers.

Around it, hold a mix you can actually draw from. PPF and EPF and VPF give a sovereign-backed base. The Senior Citizens Savings Scheme gives a quarterly income leg after 60. Equity funds carry the long tail of the plan, because a 30-year retirement is a long enough horizon to need growth.