80% of Middle-Class Indians May Outlive Their Retirement Savings
A staggering 80% of middle-class Indians are at risk of outliving their retirement savings, according to leading wealth advisor Mohit Beriwala. The warning underscores the growing financial vulnerability of India’s salaried population as they approach retirement with insufficient savings and no pension fallback.
The Retirement Crisis
Despite decades of earning, many middle-income earners enter retirement without a strong financial cushion. Rising costs, lifestyle expenses, and family obligations often leave little room for long-term wealth creation. Rent, children’s education, medical bills, and loan EMIs frequently consume most of the household income, leaving retirement planning as an afterthought.
The Inflation Threat
With average inflation in India hovering around 6–7% annually, the cost of living is expected to double every 10–12 years. A monthly expenditure of ₹1 lakh today could become ₹2 lakh in a decade. Worse still, medical inflation has surged at over 12% per year, creating an even more urgent need for a healthcare-specific retirement buffer.
The “15% Rule”
To address this looming crisis, Beriwala advocates the “15% Rule”—a disciplined approach where at least 15% of an individual’s gross monthly income is strictly set aside for retirement. This corpus must remain untouched for discretionary expenses such as vacations or family functions. Without this discipline, retirees may find themselves financially stranded within the first decade of retirement.
How to Build a Retirement Corpus
Beriwala suggests a three-layered investment strategy to build a sustainable retirement fund:
- Equity Mutual Funds: For long-term capital growth and inflation protection
- Provident Funds (EPF/PPF): For steady, low-risk accumulation
- Corporate NPS (National Pension Scheme): For structured post-retirement payouts and tax benefits
This blend allows for both growth and stability across varying market conditions and life stages.
Summary: Challenges and Solutions
| Challenge | Suggested Solution |
|---|---|
| Rising cost of living | Begin early, increase savings rate annually |
| Medical inflation | Maintain a separate medical reserve |
| No formal pension system | Use EPF, PPF, and NPS schemes |
| Undisciplined saving behavior | Automate retirement contributions |
What Should Indians Do Now?
- Rework household budgets to prioritize retirement savings
- Automate monthly transfers into long-term investment instruments
- Avoid withdrawals from retirement corpus for non-essential needs
- Regularly review and rebalance the portfolio based on age and goals
