Retirement Planning: How Strong is the Middle Class in Securing Their Future? Know the Full Data

If every person plans for retirement on time, they can spend old age happily and without stress. Everyone should do retirement planning for financial security. Many people rely on government schemes for this.

CA and teacher Meenal Goyal warned that most Indians who depend on EPF and mutual funds for retirement may be facing risks. Goyal wrote that EPF gives only 8–15 percent return. At the same time, inflation is 6–7 percent. This means the real return is only 1–2 percent. Goyal also said that medical expenses are very high now. They are growing 14 percent, more than inflation. These figures show that the return from EPF may not be as good as it seems. The return in EPF also depends on how much you contribute.

Mutual funds do not give special returns

Mutual funds are usually considered a good investment. But Goyal has a different view. She said many people think that by investing Rs 10,000 monthly in mutual funds through SIP, they will get Rs 3 crore in 30 years. But this does not consider inflation. Rs 3 crore today will be worth only Rs 75 lakh in the future. The middle class will need at least Rs 15–20 crore to keep their lifestyle.

Goyal also said that mutual funds have historically given up to 12 percent return, but individual investors get only 6–8 percent because of wrong timing and hidden costs.

How much to save

Goyal told Business Today that if your income is Rs 15 lakh per year, 60–70 percent of it should be saved for retirement. This is 15 percent more than what other financial advisors suggest. She compared today’s situation with earlier generations, who had joint families and low expenses. Today, people face home loans, small families, and rising healthcare costs. This leaves very few options for saving.

If government retirement schemes are not enough, where should people invest? Goyal said your home is your biggest pension. Real estate has always beaten inflation in tier-1 and tier-2 cities. She believes people should invest in property.

Goyal also warned that India’s financial sector often sells dreams of retirement like in America. She said retirement in America may mean working until death. If you cannot do this, you will have to depend on your children.