By Bhuvanaa Shreeram
Over the years, I have met countless professionals in their 40s and 50s. They are sharp, responsible, and financially aware. Many of them have run their own numbers for retirement. They have Excel sheets, calculators, systematic investment plans (SIPs), and a plan. Or at least, they think they do. And yet, when we sit down and go deeper, a quiet discomfort emerges because deep down, they know that something is off.
This article is for them and for you, if you have ever felt that planning for retirement is like chasing a mirage.
The Standard Retirement Planning Process: Where It Falls Short
Most people who try to take charge of their retirement follow a version of this 5-step process:
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1. Estimate their future expenses
2. Inflate them by 6 to 7 per cent to account for rising costs
3. Calculate the corpus required to sustain those expenses till age 90 or 95
4. Deduct what they already have
5. Begin a disciplined investment plan to fill the gap
It sounds methodical, even scientific. And in theory, it should work. But in practice, it often falls apart. Let us examine why.
1. The Gap Is Often Too Big And Deeply Discouraging
One of the most common outcomes of this approach is a projected “retirement gap” of Rs 3 crore, Rs 5 crore, sometimes more.
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To bridge that, the investor is often told they must invest Rs 1–2 lakh a month, starting immediately. For many people, especially with family responsibilities and lifestyle costs, that simply is not feasible.
The result? Not motivation but resignation. They shut the excel sheet and go back to hoping the future will somehow sort itself out.
2. It Ignores Life Between Now And Retirement
The other major flaw is that this model treats retirement as the only financial goal. But life between age 45 and 60 is often the most financially demanding period:
• Children’s higher education
• Weddings
• Real estate upgrades
• Sabbaticals, health expenses, or elder care
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A retirement plan that ignores these realities is like driving with blinders on. It may feel precise but it is incomplete.
3. It Treats Retirement As One Monolithic Phase
Perhaps the most subtle yet significant limitation of this approach is the assumption that retirement is a uniform 30-year period with consistent expenses. But, it is not.
The first decade after retirement often involves:
• Travel
• Pursuit of hobbies
• Starting something new
• Higher discretionary spending
The later years may look very different:
• Increased medical costs
• Lower travel or lifestyle expenses
• A stronger desire for stability, giving, or staying close to family
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Good planning must reflect these natural transitions, not just average them out. This is what we do and you should too. Retirement planning should be built on real life, not just real numbers. It should give you clarity, options, and peace of mind—not just a big number to chase.
Here is how to go about it.
1. Start With Time, Not Just Money
The first step is to understand how you as an individual or couple actually envisions your retirement years.
• How do you want to spend your time?
• Where do you want to live?
• What kind of engagement, travel, or lifestyle do you foresee?
• Will you continue to earn in some capacity?
This is not a philosophical exercise. It is practical. Because how you spend your time is the single biggest driver of how you will spend your money.
2. Project Income And Expenses Across The Full Journey, Not Just Post-Retirement
So build a detailed cash flow model from now till end of life, which includes:
• All known and expected sources of income: salary, bonuses, retirement benefits, rental income, policy maturities, possible inheritances
• All foreseeable expenses: current lifestyle, education, weddings, car or home upgrades, and long-term care
• Inflation assumptions that vary by category (medical, education, lifestyle)
This will give you a comprehensive view of financial reality, not a partial snapshot.
3. Base Investment Capacity On Real Surpluses, Not Wishful SIPs
Instead of plugging in arbitrary SIP numbers to bridge the gap, look at year-on-year surpluses:
• What is the actual investible surplus available, after all responsibilities?
• What is the most efficient way to allocate it across liquidity, returns, and risk?
This creates a plan that is doable, not just desirable.
4. Simulate How Long The Money Will Last
After mapping the income, expenses, and potential returns, make longevity projections:
• How long will the current wealth, plus future savings, actually sustain the family’s needs?
• What happens in good markets and in bad?
• When might the portfolio run dry under different scenarios?
This gives a more honest, grounded picture of sustainability.
5. Work Backwards To Find The Required Rate Of Return
This is one of the most powerful steps. Instead of guessing what returns you might get, calculate:
‘What return must your portfolio deliver consistently to make your plan viable?’
If the number is 8 per cent, create a portfolio that targets 8 per cent while managing volatility. If the number is 11 per cent, re-evaluate because you cannot turn return is not a dial we can turn at will.
6. If The Numbers Do Not Work, Adjust The Right Levers
At this point, you know the gap. So, you can explore ways to bridge it, not just by investing more, but by:
• Increasing income or extending work life by a few years
• Rethinking certain future expenses
• Exploring real estate monetisation options
• Adjusting lifestyle assumptions based on actual preferences
The plan becomes dynamic shaped by both numbers and choices.
7. When Numbers Do Work, Unlock Possibilities
Our observation says that people are in a better position than they feared. So if you are in a batter position, the clarity would give you the freedom:
• To retire a few years earlier
• To take a sabbatical or career break without guilt
• To support your children or parents more generously
• To live more fully, knowing you have enough
Why This Approach Works Better
This process works not because it is complex but because it is complete. It brings together:
• Lifestyle clarity
• Financial realism
• Portfolio strategy
• Contingency planning
And most importantly, it keeps you (the individual) at the centre of the process, not just the corpus.
Final Thought
“How much is enough?” is not a number you can Google. It is a number you must uncover through a process that respects both your life and your money.
And that is what good retirement planning really is. Not just a projection of wealth but a design for how you want to live, and a strategy to make it possible.
(Disclaimer: Views expressed are the author's own, and Outlook Money does not necessarily subscribe to them. Outlook Money shall not be responsible for any damage caused to any person/organisation directly or indirectly.)
