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Many people underestimate how much they need to save for retirement and delay the process.
Most think, “Retirement is far away—why worry now?”
But they fail to realize that starting early is the key to building a sufficient corpus.
Time flies, and before they know it, they’ve lost valuable years of compounding growth.
Others plan to start saving once they receive a salary hike, but with higher income comes higher expenses.
As a result, they reach their 50s or 55s with little to no retirement savings, making it difficult to accumulate enough funds in a short span.
The consequence? Many end up working in low-paying jobs even after retirement just to make ends meet.
To avoid this, the best approach is simple: start saving at least 10% of your salary for retirement from your very first pay check.
Table of Contents:
- How Much Should You Save for Retirement?
- The Power of Investing 10% of Your Salary
- The Impact of Salary Increments on Retirement Savings
- What if You Increase Your Retirement Contribution Annually?
- How Can Inflation Affect Your Retirement Corpus?
- Is a Financial Advisor Necessary for Retirement Planning?
- 10% for Yourself, 90% for Your Family
1. How Much Should You Save for Retirement?
George S. Clason, the author of The Richest Man in Babylon, advised long ago: “Save at least 10% of your earnings for yourself.”
Let’s see how this principle can transform your financial future.
Young professionals in India typically start working around 22 and earn ₹25,000 to ₹30,000 per month by 25.
If they set aside 10% of their salary—₹2,500 to ₹3,000—into a diversified equity mutual fund, how much could they accumulate by retirement?
2. The Power of Investing 10% of Your Salary
Let’s assume a person starts working at 22 and earns ₹25,000–₹30,000 per month by age 25.
If they save 10% of their salary—₹2,500 to ₹3,000—in a diversified equity mutual fund, here’s what they can accumulate by age 60.
i) Scenario 1: Fixed Monthly Investment of ₹2,500
- Investment Duration: 35 years
- Total Investment: ₹10.5 lakhs
- Expected Annual Return: 13%
- Corpus at 60: ₹2.10 crores
- Monthly Pension (at 8% return post-retirement): ₹1.4 lakhs
This means a simple investment of ₹2,500 per month can secure a comfortable retirement.
Even if inflation rises, this amount will help cover essential expenses.
10% investment from salary
| Starting Age of Investment |
Monthly Investment | Total Investment at 35 Years |
Total Amount Received at 60 Years |
Monthly Pension at 60 Years |
| 25 years | ₹2,500 | ₹10.5 lakhs | ₹2.10 crore | ₹1.4 lakh |
| 25 years | ₹3,000 | ₹12.6 lakhs | ₹2.6 crore | ₹1.73 lakh |
| 25 years | Start ₹3,000, 3% annual increase | ₹21.76 lakhs | ₹3.20 crore | ₹2.13 lakh |
| 25 years | Start ₹3,000, 10% annual increase | ₹97.56 lakhs | ₹6.53 crore | ₹4.35 lakh |
It is assumed that the average annual return on investment is 13%, and the annual return on retirement investment is 8% for calculation purposes.
ii) Scenario 2: Fixed Monthly Investment of ₹3,000
- Total Investment: ₹12.6 lakhs
- Corpus at 60: ₹2.6 crores
- Monthly Pension: ₹1.73 lakhs
A slightly higher investment of ₹3,000 ensures an even bigger retirement corpus, making it easier to maintain your lifestyle without financial stress.
But what happens if the investment amount increases along with salary hikes?
3. The Impact of Salary Increments on Retirement Savings
If an individual receives a 10% annual salary increment and increases their retirement savings by just 3% per year, here’s what happens:
- Starting Investment: ₹3,000
- Investment grows annually by 3%
- Total Investment in 35 years: ₹21.76 lakhs
- Corpus at 60 (at 13% return): ₹3.20 crores
- Monthly Pension: ₹2.13 lakhs
By gradually increasing the retirement contribution, the final corpus becomes much larger without putting a burden on monthly expenses.
Even a small increment in savings can lead to a significant difference over time.
4. What if You Increase Your Retirement Contribution Annually?
If a person increases their retirement investment in proportion to their salary increment (10% annually), the results are even more impressive:
- Starting Investment: ₹3,000
- Investment grows annually by 10%
- Total Investment in 35 years: ₹97.56 lakhs
- Corpus at 60: ₹6.53 crores
- Monthly Pension: ₹4.35 lakhs
By aligning your savings increase with salary growth, you ensure that your retirement corpus keeps up with inflation and rising living costs.
This method allows you to build wealth effortlessly while securing financial freedom.
5. How Can Inflation Affect Your Retirement Corpus?
Many people don’t factor in inflation when planning for retirement.
Assuming an inflation rate of 6%, today’s ₹50,000 monthly expenses will grow to ₹2.87 lakhs in 35 years.
Thus, it’s important to:
- Choose investments that beat inflation (equity funds, index funds, etc.)
- Increase savings periodically
- Opt for tax-efficient retirement plans
- Plan withdrawals smartly to maintain purchasing power post-retirement
A well-planned retirement corpus should not just meet today’s expenses but should also sustain your future needs.
6. Is a Financial Advisor Necessary for Retirement Planning?
While it’s possible to plan retirement investments independently, a Certified Financial Planner (CFP) can provide expert guidance.
They help:
- Customize investment strategies based on personal goals and risk appetite.
- Optimize tax planning to maximize returns and legally reduce tax burdens.
- Ensure portfolio diversification for long-term stability and risk management.
- Plan withdrawals efficiently to sustain post-retirement income and prevent early depletion of funds.
- Assess market conditions and adjust strategies as per economic trends.
Many people fail to consider aspects like tax efficiency, asset allocation, and inflation-adjusted returns.
A financial advisor ensures that your investments align with long-term goals, allowing you to retire stress-free.
7. 10% for Yourself, 90% for Your Family
Spend 90% of your salary for your family and save just 10% for yourself—this simple strategy ensures a peaceful, independent retirement.
Additionally, having a financial advisor can make the journey smoother, ensuring you make informed, tax-efficient, and goal-oriented investment decisions.
They help eliminate guesswork and provide a structured path to financial independence.
It’s never too late to start, but the earlier, the better!
Start your retirement journey today and secure your future!
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