Retirement Planning For Gen Z Requires More Than Just Financial Planning

Retirement is a phase in life that doesn’t spring suddenly. It follows after years of work, and depending on how well you prepare and plan for it during your working years, it will reward you in your retirement years with comfort and peace in the form of financial stability and income.

Retirement is also a phase that tests your preparations and planning for uncertainty and lack of income, as you have to typically rely solely on savings and returns from investment. With life expectancy increasing, it is all the more important to properly plan for retirement, more so for those in salaried employment given the rising inflation.

Retirement is not age based, it’s a responsibility

Today, many freelancers, part-time workers, gig-workers and full time workers who are living the 9-5 grind are all thinking of early retirement.

Says Sanjiv Bajaj, joint chairman and managing director, Bajaj Capital, “Retirement is no longer a matter of age. Whether you’re a 25-year-old freelancer navigating an unpredictable gig economy or a 70-year-old retiree stretching limited savings across expanding healthcare needs, the conversation around retirement has moved from the margins to the mainstream.”

Also, India’s demographics are changing rapidly. Now, the average expectancy is above 70 years, and a growing share of the population live in a nuclear family structure, where the traditional support systems—such as multigenerational care or inherited property—is gradually eroding.

The cost of living, especially in cities, is also rising fast, with healthcare costs growing even faster than general inflation. Traditional retirement plans, such as pensions, provident funds, and real estate often no longer provide the same as before, and without a more focused planning, many people often end up facing serious financial challenges in retirement due to wrong estimations, adds Bajaj.

Ticking Clock

According to advisors, Gen Z, the youngest among the workforce now, should start planning for retirement to get the most out of the power of compounding. “The 20s may feel far removed from old age, but financial security in later life hinges on decisions made today. Time, as economists have long observed, is the most powerful variable in wealth-building,” says Bajaj.

He adds: “Even modest monthly investments in retirement instruments—whether through systematic investment plan (SIPs) or through investment, such as the National Pension System (NPS) or annuity-linked funds—can grow substantially over decades. The earlier one starts, the less one has to catch up later. It’s a principle many acknowledge in theory but struggle to implement in practice.”

Bajaj highlighted that there’s also a structural gap. Most young workers in the gig space operate outside of formal pension frameworks. As such, he advised them – freelancers, consultants, and start-up employees to self-create their own security nets, without depending on employer-provided plans.

Similar Perspective with More Difficulties

Bajaj added that though the professional landscape is more or less the same, youngsters today have more challenges to overcome. There is less job certainty, higher inflation, increased housing costs, more volatile market conditions, and expensive higher education costs.

“A 2023 report by the Insurance Regulatory and Development Authority of India (Irdai) points to a telling gap: only a fraction of Indians are covered by pension or annuity products. The overwhelming majority rely on traditional instruments like Employees’ Provident Fund (EPF), Public Provident Fund (PPF), or property—tools that were never designed to handle long lifespans or rising medical bills. India’s healthcare inflation is now over 14 per cent annually—among the highest in the world,” adds Bajaj.

Regret Is the Costliest Expense

Bajaj added that many investors often end up regretting later that they did start investing sooner. “Speak to any financial advisor or insurance claims officer, and a familiar theme emerges: regret. Not about market fluctuations or fund performance—but about delay. About waiting too long to act. About the misplaced confidence that ‘there’s still time’,” he adds.

So Where Do You Begin?

According to Bajaj, there’s no one-size-fits-all when it comes to investing. Nevertheless, broadly speaking, one can follow certain basic guidelines depending on one’s age as the risk-bearing capacity is relatively higher when one has just started working. Here are the basic guidelines.

In your 20s and 30s

• Start a monthly retirement investment, no matter how small

• Take term insurance early while premiums are low

• Learn how annuities and pension schemes work—before you need them

In your 40s and 50s

• Adjust savings to account for inflation and healthcare needs

• Ensure your parents (and yourself) have sufficient health coverage

• Consult a planner for income strategies in retirement

In your 60s and beyond

• Opt for health plans with lifelong renewability

• Update nominee information and consolidate financial records

• Consider converting lump-sum savings into stable monthly income

What Seniors Should Focus On?

For those nearing or already in retirement, the focus shifts from saving to sustaining. It is imperative to focus on choosing the best health policy that suits one without hampering his/her financial aspects. It is also very important to have comprehensive coverage that won’t cause a financial crisis during a medical emergency.

“Health protection becomes paramount. While Irdai now permits health insurance beyond 60, premiums climb sharply and coverage often comes with conditions. Early enrolment—before medical conditions set in—remains the safer path,” he adds.

Stability in Retirement and Aftermath of Passing 

It is important to maintain a stable income source during one’s retirement years. Schemes like the Pradhan Mantri Vaya Vandana Yojana (PMVVY) or private annuities can create predictable income streams and reduce both financial and emotional dependency.

It is important to have clarity on nominee through proper documentation. “Documentation is an overlooked, but critical piece. Policies lapse, and nominee details go with getting updated, and families are often left to navigate legal hurdles during moments of crisis. Preparing paperwork today can spare hardship tomorrow,” Bajaj adds.

Retirement Is A Test Of Your Preparations

Retirement preparation is not just a time-based task but also a period-long discipline-based test. It requires you to be disciplined and consistent in your savings and investments. Your analyses must be precise and well calculated to avoid any financial mishaps.

“Ultimately, retirement doesn’t test your wealth. It tests your preparation. It asks whether you saw the future coming and whether you took it seriously enough to plan for it. In a country as diverse—and economically divided—as India, retirement cannot be left to chance. It must be seen not as a closing chapter, but as a new phase that deserves equal, if not greater, attention. And while no one can fully predict what tomorrow may bring, planning today ensures that we meet it with dignity—not desperation,” Bajaj further says.