Rajesh, 52, an employee in Gurgaon, often tells himself, “I’ll just work until I am 65, and saving for retirement should not be too much trouble.”
On the surface, it seems reasonable – Rajesh is healthy today, experienced, and his organisation still values him. However, there may be something to change his trajectory. For instance there could be an unfortunate health issue, a downturn in the economy, or his organisation making layoffs. Rajesh might find himself out of a job and facing retirement sooner than he anticipated. Suddenly, “working longer” is no longer a plan but a bet.
A real-world reminder: recently, a young CFO of a leading finance company died of a sudden cardiac arrest. Such incidents highlight how unexpected health issues can abruptly change even the best-laid financial plans
Rajesh’s ideal perception is remarkably common. With rising costs and deferred financial planning the idea of working longer, as an objective financial strategy, sounds like a solid option for many. Working longer feels more intuitive and easier than cutting back on spending or putting money away consistently.
Well, those who are aligned with this idea, are dead wrong. Reality is often different.
With rising health issues, fewer job opportunities for older workers, and growing uncertainty, relying on “working longer” as a retirement plan makes little sense. Without a clear and proactive financial plan, families risk falling short of income when they need stability and peace of mind the most.
Counting on working longer? 7 Reasons that’s a risky bet
#1. Health issues can shorten careers
Around the world everyone is continuously facing an increasing burden of lifestyle diseases — in many cases, diabetes, hypertension and heart conditions are diagnosed earlier and with a greater degree of severity than many other countries. An otherwise fit and healthy professional in their 50s could encounter health problems that make early retirement necessary. When an individual relies on a steady income while disregarding medical facts and realities, they can end up leaving their family in a precarious position, facing both living expenses in addition to hospital bills.
In a recent study, it was found that Indians suffer heart attacks almost 10 years earlier than Western populations, with nearly two-thirds of cardiovascular deaths being premature. Hope for the best, but plan for issues — medical setbacks are unpredictable but planning cushions their impact.
#2. The job market doesn’t help workers in their later years
India’s job market is generally very adverse to older workers – employers favour fresh graduates who are technological capable and will work for less money. A trained and experienced worker in their late 50s who has previously competed very well against fresh graduates, lacks the same competitive edge today, especially in fields that change very quickly – such as IT, media and finance. Moreover, as a 59-year-old, the workload may exceed what they are capable of doing despite possessing substantial skills and experience.
#3. Increasing healthcare inflation over strained salaries
In the world, healthcare costs are increasing every year compared to people’s salaries, which are growing unfortunately slower. If a certain surgery costs ₹2 lakh today, it might cost ₹5–6 lakh in 10 years. Even if you continue to work longer, it can be difficult sometimes to even keep up with the raise in fees for medical treatment, let alone the demands of retirement.
Moreover, a report found that 71% of Indians feel medical expenses have “skyrocketed,” and nearly 1 in 5 admitted to postponing essential treatment due to high costs (link). This underlines how healthcare inflation is not just a future problem, but already a present-day crisis for Indian families.
#4. Dependents increase financial burdens
In the western world, most parents cut the financial apron strings when the children still lives at home, but many Indians continue to financially support their children’s post-graduate education, delayed marriage, or even aging parents later into their 50s and 60s. Continuing to work longer does not always equate to saving more income, it can mean you are financially supporting family expenses for a longer time. If your retirement plan gets delayed, it’s also difficult to save for retirement once you support the additional responsibilities.
#5. Burnout and diminished productivity
Continuing to work into your 60s sounds great in theory, but in practice, our physical capacity and productivity tends to be less than that when younger. Being under constant pressure to compete with your young, quippy digital-native colleagues can be taxing. This type of pressure often leads to burnout, and as a consequence you may find your performance at work and your lifestyle at home adversely affected.
#6. No strong safety net in India
In countries like the U.S. and the U.K, if you work longer there is sometimes state pension and subsidized health-care. India has no universal safety net. Many of the pension schemes, like EPF and the NPS, only cover a small section of workers, and for the vast majority of private-sector employees, when the salary stops, so does the income, making “work longer” a very risky proposition.
#7. The cost of delaying savings is diminishing compounding
The greatest risk of this strategy is the time lost. Wealth for retirement is built through compounding — so the sooner you invest, even at low amounts, the better. Starting at 30 with ₹10,000 a month gives your retirement fund more than ₹2 crore by 60 (at a 10% return). If you wait until you are 50, you will likely end up with barely ₹20 lakh. You will never work long enough to make up this gap.
The solution: Building a smarter retirement plan in India
Beginning early, even with a little
Time is your greatest friend when it comes to retirement savings. When you start at age 30 you can invest ₹5,000 a month and create a very sizeable corpus by age 60, but if you start at 50 you will have to invest almost ten times that amount to create the same corpus. The compounding interest speaks for itself when you can invest early, and even if it is small regular amounts over time, you will still be able to take advantage of the compounding interest and time.
Delaying retirement savings by just 10 years can shrink your potential wealth by almost 60%. As Warren Buffett puts it, “Do not save what is left after spending; spend what is left after saving.”
Create a Retirement Corpus Goal
Do not just save endlessly, without knowing where you are going. To assist your savings goals, it is very important to set an objective. As a rough guideline, your savings goal should be to save 20-25 times your annual expenses, before starting to withdraw from your retirement savings. This way you can continue your current lifestyle and cover medical expenses, and sleep easy about your financial future.
To secure a retirement income of ₹1 lakh per month, you will need a corpus of around ₹3 crore at today’s prices. As Suze Orman wisely says, “True financial freedom comes when your heart and mind are free from the constant worry about life’s what-ifs.”
Insure yourself
Health or term insurances are not just “nice to have” protections – one medical or family crisis can wipe out years of careful saving in minutes without them. Only insurance guarantees your retirement plan is back on track when the rainy days hit.
Review and adjust over the years
Retirement planning is not a “one-and-done” task. Review your plan every 2–3 years. As your salary increases, channel more capital into your retirement account. And as you get closer to retirement, gradually shift more into safer assets while reducing equity exposure. At this stage, the focus should be on balancing returns with the safety of your capital.
Create Passive Income
Work on creating sources of passive income instead of relying on a stressful job late in your career – whether this is rental income, dividends, or part-time consulting that is convenient for you. These options give you flexibility, and less stress later on about being tied to a 9-to-5 job into your sixties.
Diversify
Simply putting your retirement funds in fixed deposits or gold would not be adequate. A diversified portfolio achieves a balance between growth and safety by using different asset classes. In general, equity mutual funds or equity exchange traded funds will provide the solid long-term returns, while the PPF, EPF and bonds, work as stabilizers in your portfolio. Gold and/or REITs (real estate investment trusts) to will provide more diversification. A diversified portfolio will enable you to fight inflation as well as provide some spread of risk and given you a resilient financial plan.
It may seem appealing to think you can “work longer,” but in India, this is a risky strategy. What you see as health issues, fewer job opportunities, rising costs of living, and no real social safety net mean “work longer” is, at best, uncertain — it is more likely a gamble than a plan.
There are only three ways you can achieve some security in your financial position. The first is to start early, invest consistently, and diversify your portfolio between risk and safety. Once that is complimented with insurance, an annual review, and passive income sources, you will be on the road to having independence and security in retirement.
The purpose of this article is to share insights, data points, and thought-provoking perspectives on investing. It is not investment advice. If you wish to act on any investment idea, you are strongly advised to consult a qualified advisor.