How Do You Start a Retirement Plan in India?

2025-08-04

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Until about two decades ago, retirement was often defined by employers, and employees were not permitted to work after reaching a certain age. The retirement age was initially fixed at 58 for several years and then was subsequently revised to 60 years.

With increasing life spans and the availability of opportunities in a modern, liberalised Indian economy, people now have the freedom to choose when to retire. While some people decide to hang up their boots when they feel financially secure, others keep working until their health permits them to do so. But in either case, you need to start saving for your retirement as early as possible.

Key Takeaway

Start planning for retirement early. The sooner you begin, the more your money can grow through the power of compounding.
Use trusted options like EPF, PPF, and NPS to build a strong, tax-efficient retirement corpus.
Remember that EPF and PPF offer stable, risk-free returns backed by the government, while NPS provides market-linked growth with flexible tax benefits.
Secure a steady post-retirement income with annuity plans like Pension4Life, which guarantee lifelong payouts and protect your family’s financial security.
Always balance safe investments with wealth generation plans like ULIPs or saving plans with guaranteed returns to build a well-rounded retirement portfolio.

How to Begin Planning for Retirement?

If you have just started earning, it may be too early for you to judge what you would like to do. However, it’s always better to stay prepared for the most commonly expected future, i.e., retiring at 60 and living until 85.

It’s not very difficult to start your retirement plan. Just keep the following in mind:

A retirement plan works on the principle of ‘income replacement’. So, if you are earning ₹30,000 right now, you should save enough to have this income as your post-retirement pension.
You should start investing at least 10% of your monthly income towards retirement. 15% is the best ratio you can get.
Consider higher savings, as the scenario for employment keeps changing, and you may face periods of unemployment. Inflation is another factor that you must consider. So, higher savings will help cover this.

Where to Invest for Building a Retirement Corpus?

Initially, your investments may look modest, but the fund will grow over the years if you choose the right savings plans. Remember, you are saving to replace your current income, so your annual savings will be limited to a percentage of your income.

To start, you can save 10-15% of your monthly income into any of the following investment options:

Employees Provident Fund (EPF): The EPF, commonly called PF, was launched in the 1950s as a retirement planning scheme for employees working in organisations with more than 20 staff members. A fixed percentage was deducted from the employee’s salary each month and transferred to the EPF account. The employer also had to contribute an equal amount to this PF kitty.

The government of India adds interest to this amount. This compulsory saving scheme ensured financial discipline and built a retirement fund for the employee. PF contributions are also attractive because they are deductible from taxable income.

Public Provident Fund (PPF): PPF is a Central Government guaranteed investment and tax-saving instrument, still considered to be one of the best options to deliver inflation-beating returns. The current rate of interest is 7.1% and is a safe option if you are looking for risk-free, stable returns in the medium-to-long term.
You can open a PPF account at select bank branches and post offices. A PPF account has a minimum tenure of 15 years and can be extended in blocks of 5 years after maturity.
The amount deposited in PPF accounts is eligible for deduction under Section 80C, and all withdrawals are exempt from taxes. However, partial withdrawals are permitted only from the 7th year onwards. A minimum annual deposit of ₹500 is mandatory to keep the account active.
If you start investing ₹67,000 every year starting from the age of 30 and decide to keep the account running until you turn 60, you will earn a lump sum amount of ₹69,00,000 (₹69Lakhs) at maturity.

National Pension Scheme (NPS): NPS is a voluntary pension scheme that offers tax benefits under multiple sections. Contributions are deductible under Section 80C, and an additional ₹50,000 can be claimed under Section 80CCD(1B). Up to 40% of the maturity amount used to buy an annuity is also tax-exempt.
If you start investing ₹6,000 per month from the age of 30, your final corpus will depend on market performance, as NPS returns are market-linked and typically range between 9–12% per annum. For example, at a 9% average return, your corpus may reach around ₹66 Lakh, while at 12% it could grow to over ₹1 crore by the time you turn 60.
At retirement, you can withdraw up to 60% of the corpus tax-free, and the remaining 40% must be used to buy an annuity to receive a monthly pension. The actual monthly pension amount will depend on prevailing annuity rates at that time.

Explore Additional Wealth Generation PlansBesides these legacy plans, you can also explore wealth generation plans that can grow some of your investments aggressively during the same period. This ensures you have Unit Linked Insurance Plans, Saving Plans with Guaranteed Returns in your investment portfolio.

Retirement Planning in India | Best Retirement & Pension Plan | Buy Retirement Plan Online

Pension4Life: The Pension4Life plan by Canara HSBC Life Insurance is one of the safest long-term investment plans that offers:
1. Immediate Annuity: The pension starts as soon as you invest a lump sum amount.
2. Deferred Annuity: Invest gradually and start a regular stream of income a few years later.

If you have recently retired and would like to invest a lump sum amount to earn a regular income, the immediate annuity will meet your requirements. If you have a long way to go before you retire, a deferred annuity gives you time to invest over the years and build a corpus.

You will receive income streams called “annuities” till the end of your life, after which the purchased or invested amount would be given to your nominee. In case you have opted for a Joint Life Annuity, your spouse would continue receiving annuity even after you, until his/her demise. The purchased/invested amount would then be handed over to your nominee.

Conclusion

To summarise, your retirement plan should be balanced, keeping in mind your financial goals, security for your family, and your current ability to invest. A healthy mix of high-growth funds and relatively safer instruments like annuity plans will help you build a stable, sustainable retirement kitty that will allow you an equally comfortable lifestyle post-retirement.

It’s also important to remember that annuities are not the same as fixed deposits or mutual funds. They are designed specifically to convert your retirement savings into a stable income stream for life. You can choose payout options such as taking part of your accumulated amount as a lump sum and the rest as a regular annuity. However, your actual payouts will always depend on prevailing annuity rates, so plan accordingly.

Most annuity plans also have a vesting age and an accumulation period, which you should consider when choosing between immediate or deferred annuity options.

By combining long-term growth investments with stable annuity plans, you can build a sustainable retirement corpus that allows you to enjoy the lifestyle you want, without worrying about outliving your savings.

Disclaimer - This article is issued in the general public interest and meant for general information purposes only. The views expressed in this blog are solely those of the writer and do not necessarily reflect the official policy or position of Canara HSBC Life Insurance Company Limited or any affiliated entity. We make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the blog or the information, products, services, or related graphics contained in the blog for any purpose. Any reliance you place on such information is therefore strictly at your own risk. You should consult with a qualified professional regarding your specific circumstances before taking any action based on the content provided herein.

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