Suryaa Business Desk: Personal finance experts are warning that a retirement corpus of Rs 1 crore is insufficient for today’s youth, particularly those around 30 years of age. While many view Rs 1 crore as a milestone for a comfortable retirement, experts state that rising living costs and inflation make this amount inadequate for when individuals reach the age of 60.
The primary factor cited is inflation, which erodes purchasing power. Assuming an average annual inflation rate of 6 percent, the value of Rs 1 crore today will be equivalent to approximately Rs 17 lakh to Rs 18 lakh in 30 years. For a middle-class family currently spending Rs 50,000 per month, maintaining the same standard of living in 30 years will require between Rs 2.85 lakh and Rs 3 lakh per month, amounting to an annual expense of at least Rs 35 lakh.
Healthcare inflation and increased life expectancy are also identified as major challenges. While general inflation is between 5 and 6 percent, healthcare and hospital costs are increasing at a rate of 12 to 14 percent annually. Additionally, with life expectancy rising to between 80 and 85 years, retirees may need to sustain themselves for 20 to 25 years without a steady income.
Financial experts estimate that a 30-year-old today will need a corpus of at least Rs 5 crore to Rs 8 crore by retirement. To achieve this, experts suggest starting long-term investments early through instruments such as equity mutual funds, Public Provident Funds (PPF), and the National Pension System (NPS). They further recommend a "step-up SIP" approach, where investment amounts are increased by 10 percent annually in line with salary increments.