What it is
A retirement number is the total savings you would need so that, once your salary stops, your investments and pension can pay for your living costs for the rest of your life. There is no single right figure. It depends on your spending, your age, how long you expect to live and what other income you will have.
The Pension Fund Regulatory and Development Authority (PFRDA), the regulator for pensions in India, treats this as a skill people need to learn. Its Retirement Planner Scheme exists to raise awareness about retirement planning, the National Pension System (NPS) and Atal Pension Yojana (APY).
How it works
PFRDA’s page lists “estimating retirement needs” as one of the topics covered in its workshops, alongside investment options, tax benefits and the role of NPS and APY. A practical way to work through that topic is in steps.
- Decide when you want to stop working. The earlier you retire, the more years your savings must cover.
- Estimate your yearly spending in retirement. Start from what you spend now, and separate essentials such as food, utilities and healthcare from optional costs such as travel.
- Allow for rising prices. Costs go up over time, so today’s spending will be higher by the time you retire.
- List income you can count on. This could include a pension or other regular payments.
- Work out the gap. The difference between your future spending and your secure income is what your savings must fund.
- Turn the gap into a monthly saving target. A tool such as the SIP Calculator or the Compound Interest Calculator shows how regular investing can grow over time.
The figures in these steps are yours to fill in. The sources do not give a standard percentage or corpus size, so any rule of thumb you come across should be checked before you rely on it.
Why it is in the news
PFRDA’s Retirement Planner Scheme page, published on its website, describes how the programme works. Under it, Retirement Planners are appointed to conduct workshops for subscribers and the general public. PFRDA says the planners are trained professionals who answer participants’ questions and help them make informed decisions about retirement savings.
According to the page, a professional training agency, Skillera Tech Private Limited (earlier known as Hero Mindmine Institute Private Limited), runs the scheme on PFRDA’s behalf and coordinates the activities. The stated aim is to spread retirement-planning knowledge in both rural and urban areas.
What it means for you
If you are unsure where to begin, a workshop under this scheme is one way to learn the basics, since the topics include retirement needs, investment options and tax benefits. Check the PFRDA website for details of how to attend.
Two government-linked retirement options feature in the scheme: NPS and APY. NPS Trust, which publishes an About NPS page, is the body associated with the National Pension System. Read the official scheme documents for each product, including contribution rules, charges and withdrawal conditions, before you decide anything.
Retirement planning is personal, so compare options against your own spending estimate and time horizon rather than a generic target.
