How Much Money Should You Have Saved for Retirement in India in 2025

Defining the Need for Retirement Planning

Retirement planning is in place to help you financially plan what your life will be like once you retire. Although it probably seems far away at this time in your career, being proactive will help you prepare for tax costs, medical expenses, and other expenses.

Having retirement funds available when you retire or in case of an emergency situation, such as an illness or injury, can create some degree of peace of mind. That comfort allows you to focus on work and your life instead of on financial stress.

How to Prepare for Retirement?

Although saving for retirement may seem daunting, you can always begin saving for retirement at any age. Some key considerations are:

Take an assessment of your current financial state, consider your retirement plan, and be proactive about your retirement strategies to make sure that your retirement age will be fun and secure.

How Much Do You Need to Save for Retirement?

The amount to be saved for retirement will depend on a variety of factors: your age, your salary, your lifestyle and your financial goals. In India, for salaried employees, one popular savings option is the Employees' Provident Fund (EPF), which involves contributions of 12% from the employer and 12% from the employee.

Upon retirement, the EPF amount can either be withdrawn completely as a lump sum or can be used to purchase an annuity. However, the EPF will likely not be enough on its own, in which case additional savings will need to be made.

Another government-backed savings option is the Public Provident Fund (PPF), which can provide tax benefits and a higher interest rate than regular savings accounts.

An individual can invest between ₹500 and ₹1.5 lakh per year (in one financial year) for a tenure of up to 15 years, extendable by an additional five years. It’s wise to choose investments whose returns can outpace inflation to preserve and grow your wealth over time.

The National Pension System (NPS) is another option for retirement savings, which provides tax benefits and returns higher than traditional savings.

Employees contribute a certain percentage of their salary and there is an option for the employer to match this. On retirement, the drawings from an NPS account can be made as a lump sum or by purchasing an annuity.

FAQs

Why is retirement planning important?

Retirement planning is essential to be financially prepared for life after work, including future medical costs, taxes, and unanticipated circumstances, and also provides peace of mind.

When should I start saving for retirement?

It is wise to begin retirement savings as soon as possible and take advantage of compounding to have a bigger retirement sum by the time you retire.

How much should I save for retirement in India?

According to various news reports, saving 15%-20% of your income for retirement is recommended, based on your age, income, expenses, and what you want to achieve.

What are popular retirement savings options in India?

The most popular options are the Employees' Provident Fund (EPF), Public Provident Fund (PPF) and the National Pension System (NPS). Each plan has a tax benefit and offers long-term growth.

Can EPF alone provide sufficient retirement funds?

Most likely, EPF savings alone will not cover a comfortable retirement you should look to invest in addition to EPF with PPA, NPS, mutual funds, or other investment savings categories.

How can I grow my retirement corpus effectively?

Start saving for retirement as early as possible. Build a budget around retirement first. Branch out into various investment types. Start to increase contributions if your employer contributes to a retirement fund.