How to ensure your retirement savings sustain you through inflation, risk and other uncertainties

Planning smartly for the future when you are retired and have to rely on savings rather than active income to get by, is essential. Retirement planning demands a careful analysis of various factors, foreseeable or not.

Here's a look at how to ensure your retirement savings can sustain you through ever increasing cost of living, medical inflation, lifestyle inflation, longevity risks and other uncertainties.

What are actionable steps to plan retirement?

• The first step is to identify your goals and aspirational lifestyle post-retirement. This includes your family situation, health status, possible devaluation of net worth due to inflation and other factors.

• The next step is to assess your current financial status and earning potential against monthly spends in the present and likely additions in the future. This exercise will help determine how much corpus you will require to accumulate by the time to retire to maintain the lifestyle you want.
• It is best to start as early as possible so that you can take advantage of the power of compounding — no matter your choice of investment. Be it safer avenues such as government schemes or the equity markets, nothing adds up better than a longer tenure for returns.
• Choose diverse investment paths as per your requirement, goals and age. For those who start young, a higher allocation towards equities can slowly be tapered toward more conservative options as you age. India provides various asset classes to invest such as bank deposits, bonds (fixed income), equities, cash and cash equivalents, equities, real estate and more.

• You can also choose investment options based on your salary and tax exemptions requirement, as government schemes such as the PPF, EPF, NPS and NSC allow you to build retirement corpus, while providing some tax benefit at end of tenure.
• You must also plan for emergencies with a separate fund and / or insurance cover to avoid depleting your retirement savings due to unforeseen circumstances.

Why you should future-proof your retirement, explained

In a post on social media, Chartered Accountant (CA) and financial advisor Nitin Kaushik noted that most Indian today are making the mistake of “planning for a retirement that no longer exists”. This means that fiscal planning for most has not caught up with the realities of future expenses.

He explained that to lifestyle similar to ₹1 lakh per month in 2026 at your retirement age, you would need to build a corpus of at least ₹3.5 crore — with qualifiers. “This assumes you retire at 60 and live until 85, with your investments yielding a 2% ‘real return’ above inflation,” Kaushik noted.

Kaushik noted that there are primarily two factors that blindside most retirees — healthcare inflation and longevity. He explained, “If you are calculating your retirement based on a 4% withdrawal rate and a 20-year horizon, you are mathematically likely to run out of money by your 70s.”

This is because general inflation is currently at 5%, medical inflation between 12-14% and these numbers are only likely to rise in the future. Breaking this down, he noted that a medical procedure costing ₹5 lakh in 2026, could cost ₹27 lakh in 2041. This means that a single medical emergency or major illness could “liquidate your entire retirement plan”.

Here's how you can avoid this trap:

How to build risk-ready retirement corpus?

• Kaushik suggests building your corpus at “300x monthly expenses” in 2026.
• For anyone earning ₹1 lakh per month in 2026, to sustain a similar lifestyle at retirement would demand ₹3.5 crore corpus.
• He also advices that unlike the US, where most retirees follow the 4% annual withdrawal rule, in India's high-inflation environment, a safer a 3% withdrawal rate is a “safe” choice.

• If possible, you can also consider lifestyle arbitrage — moving to Tier II or III towns to save on rent, utilities and other costs; and get more for the same money, while saving more. Kaushik estimates that this “effectively adds 10 years to your portfolio’s lifespan” without you actually saving more than usual.
• Plan for longevity. While most calculations estimate your retirement at 60 and lifespan on average till 85, science and medicine do allow humans to live longer lives. This means that some of your payouts — pension, insurance or provident fund, might run out before your time. For this, you can consider annuity plans, long-term insurance, savings set aside (in mutual funds, FDs, or other instruments) for use once your cross a certain age.

Disclaimer: This story is for educational purposes only. The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.