Your biggest retirement risk may not be inflation. One risk you can't afford to ignore

If you think the biggest risk to your retirement corpus is whether it will withstand inflation, you may be in for a surprise. While most investors assume that a random figure, say ₹1 crore, is enough to sustain them after they retire, they often overlook the longevity of that amount.

India's life expectancy has increased significantly over the past five decades due to rising nutritional intake and declining infant mortality rate. This positive trend can also be attributed to advances in medical science and sustained improvements in disease management.

According to the Economic Survey 2025-26, the average number of years a person was expected to live, based on prevailing death rates and their year of birth, rose from 49.7 years in 1976 to 70.3 years in 2023.

While a longer life is certainly good news, it also means that a person's retirement corpus must work longer. If your grandfather needed to save enough to fund just 10 years of retirement, you may need to build a corpus that is at least twice as large to support yourself and your family for as long as necessary.

What does this mean for your retirement corpus?

Since life expectancy has improved over the years, those seeking financial security after exiting the workforce are recommended to plan and stress-test their retirement corpus up to at least age 85–90, rather than assuming a shorter retirement period, according to Harendra Zatakia, a Sebi-registered investment advisor and the Founder of Wealth Aligned Financial Advisory.

“We also need to remember that women generally live longer than men. So retirement planning is not simply about “How long will I live?” but “How long will my family need this corpus?” For a couple, the financial plan should account for the longer-living spouse,” he added.

Apart from the increasing lifespan, people who are set to retire soon also need to plan for a retirement corpus more seriously, as the next generation is unlikely to take care of the older generation as in the past, in joint families, said Harsh Vardhan Dawar, Founder at Wealth Cafe Financial Advisors.

How many years of expenses should you have?

A 30-year-old today should be planning for a retirement that could last 25-30 years, not just the 15–20 years earlier generations budgeted for, Zatakia said.

Citing an example of a 30-year-old sole breadwinner spending ₹40,000 a month today, he said that just accounting for inflation to build a retirement corpus is no longer enough. “Healthcare costs rise much faster than everyday living expenses in India; healthcare inflation is estimated at close to double general inflation."

“If someone plans their retirement corpus assuming a flat, single inflation rate across all expenses, they could fall short by a wide margin, potentially needing a corpus that's 60–70% larger than a simple, one-rate calculation would suggest, once healthcare is properly accounted for. In rupee terms, for someone in this example, that gap can easily run into several crores of additional corpus by the time they retire,” he explained.

According to him, retirement planning that only asks "how many years will I need this money for" is only half the question. The other half is "which of my expenses will grow the fastest", and for most Indians today, that's healthcare.

How should investors balance between equity and safer investment options?

It's well known that building a solid retirement corpus requires consistency and an understanding of your risk appetite. These factors would eventually determine how and where a person should invest in the long term.

“For a conservative investor, EPF is an automated way to save for retirement. It earns them tax-free returns and the contributions keep growing with their salary in most cases. Not touching this corpus from age 25-60 can make a huge difference,” Dawar advised.

Additionally, he also recommended investors consider the National Pension Scheme (NPS) if they are looking for some equity exposure. “One can choose the automated allocation option that reduces the exposure to equity as their age increases and they near retirement,” he added. Another benefit of investing in NPS is its tax advantages.

Meanwhile, Zatakia said that for younger investors, even a conservative portfolio may need some equity because the investment horizon could be 25–30 years. However, as retirement approaches, the allocation should gradually become more defensive to ensure that the funds are accessible in the near term.

What mistakes should be avoided while planning for retirement?

One of the biggest mistake that one can make while planning for retirement is not staying consistent. If you start saving for retirement at 25 years of age, the amount that you need to put aside each month till your retirement age of 60 is actually small, Dawar noted.

“More often than not, investors stop saving for some years, or utilise the retirement corpus for buying a home, etc. Then at the age of 35, they have to start all over again and are staring at a larger monthly investment to meet the retirement target,” he added.

For example, a 30-year-old individual can achieve their retirement corpus with a monthly investment of ₹12,200. However, if the person delays their investment journey and starts at age 40, they will need to put aside ₹20,500 each month.