A retirement corpus outlasts inflation only when it grows faster than prices for decades, not when it merely “feels safe” in the short term. Inflation means the general price level rises and the same rupee buys fewer goods and services over time, so doing nothing quietly reduces purchasing power.
Start with one clear target
What lifestyle needs to survive when everything costs more? Pick a simple base number: today’s monthly expenses (including rent, groceries, travel, and one realistic “fun” budget), then assume it rises every year with inflation. If you want an easy starting point, write two scenarios on paper—“basic” and “comfortable”—because the trade-off is real: aiming higher needs higher monthly investing, but aiming too low can force hard cuts later. During a client call last month, the first surprise was not market risk; it was how many “small” yearly costs (repairs, weddings, helping parents) were missing from the plan.
Choose growth + stability (not just one)
If prices keep climbing, why rely only on products that mostly protect capital? Inflation reduces purchasing power, so the corpus usually needs a growth component (often equity) plus a stability component (often high-quality debt), and the mix changes as retirement gets closer. Think of it like managing traffic on Mumbai’s Western Express Highway: staying in only the slow lane feels calm, but it rarely gets you to the destination on time.
Here’s a layman-friendly way to structure it:
- Growth bucket: long-term investments meant to beat inflation over years (expect ups and downs).
- Safety bucket: steadier investments for near-term needs and peace of mind.
- Cash buffer: money for the next 6–12 months of surprises, so you don’t sell long-term investments at the wrong time.
Use simple, repeatable tools
Next question: how to invest without constantly timing the market? A SIP (Systematic Investment Plan) lets you invest a fixed amount in a mutual fund at regular intervals (like monthly), instead of trying to invest one big lump sum. Several platforms note SIPs can start as low as ₹100 per month, which makes “start now” more practical than “start perfectly.”
For the retirement foundation, many people also use EPF/PPF/NPS because they are designed as long-term savings vehicles, each with different lock-ins and withdrawal rules. For example, PPF has an annual contribution cap of ₹1.5 lakh and a minimum ₹500 contribution to keep the account active, so it works well for disciplined, slow-and-steady saving. If working with financial planners in India, ask for a one-page plan that shows: monthly SIP amount, yearly step-up (like 10% each year), and which bucket each product serves.
Keep it alive for 20+ years
Most retirement plans fail due to behaviour, not maths—skipping SIPs, pausing for “just a few months,” or pulling money out for emergencies. A simple fix is a calendar rule: review every April (salary hikes) and every October (after big festive spending) and rebalance back to your chosen mix. If you speak to financial planners in Mumbai, ask one direct question: “If markets fall for 18 months right before retirement, what changes first—my spending, my asset mix, or my retirement date?”