Retirement has been long envisioned as a time of freedom — a time for rest, travel, and enjoyment after a lifetime of hard work. However, this is not the reality for a lot of people today. Increasingly, a growing portion of retirees are weighed down by EMIs, which take up a large portion of their pension or savings.
Consider Ramesh, a 62-year-old retired teacher from Pune. Although he had intended to live off of his pension, he is weighed down financially by ongoing home loan payments and personal loans taken out for his children’s education and marriage. Ramesh’s story reflects an increasingly common occurrence for many more Indians. They are now entering retirement with debt and are entering the phenomenon of “EMI Retirement.”
The growth of the EMI culture
EMIs are common in India. From home loans to personal loans to credit cards, for many Indians, borrowed money is the way of life for life’s major expenses. While it can help achieve goals, it results in financial burden over the long term.
Let’s consider Anjali, a 58-year-old woman who worked for a long time in Bengaluru. She took loans for her children’s education, a car, and for renovating her home, confident that her salary would allow her to meet the EMIs. Post retirement, however, once Anjali begins to repay loans, her pension will not be sufficient for her to meet anything other than her daily expenses.
With soaring housing prices, expensive education, and sudden medical emergencies, many people turn to borrowing just to get by — often without considering the long-term consequences.
Enter, the EMI Retirement.
Reasons for debt in retirement
Many Indians are entering retirement with unpaid loans, and examining these debts reveals why EMI retirement has become so widespread.
Lack of Retirement Planning
Many people underestimate how much they will need after retirement. Take Mr. Rakesh, a 60-year-old office worker from Delhi. He believed his provident fund and modest savings would be enough to sustain his family. But with a home loan still unpaid and daily expenses rising, his savings quickly fell short. His story underlines a hard truth — without early and thoughtful planning, retirement can become financially stressful instead of peaceful.
Increase in Medical Expenses
On top of everything else, medical expenses are growing and most retirees do not have enough insurance cover. Mehta, 65, a retired school principle, is now using her small savings for check-ups, medication and unplanned medical requirements. Getting an adequate medical insurance is compulsory otherwise you will end up using all your savings.
Inflation and the Rising Cost of Living
Disciplined savers can hardly keep up with inflation. Even with inflation, we often forget about the devastation inflation causes on our wealth. A corpus of ₹1 crore we may have once thought to be enough is not even considered now. With the daily costs of living, utility bills and growing food prices, considering inflation while planning your expenses is necessary.
Family Responsibilities and Societal Pressure
As in many cultures, Indian elders often take on the responsibility of easing the financial burden of their families—whether it is funding children’s education, paying for weddings, or even helping a sibling or relative buy a house. Over time, these commitments can lead to significant borrowing.
The emotional burden of debt in retirement
In retirement, debt does not only influence our finances, it can be overwhelming mentally, and emotionally. The idea of living out the retiree dream of relaxing, pursuing hobbies, and spending time with family is often disrupted by anxiety from EMIs, loan payments, and unexpected expenses taking away pension or income.
An Indian study based on the nationally representative BKPAI survey shows that older adults with limited income or low socioeconomic status are far more vulnerable to psychological distress, particularly anxiety and depression. Also, the money problem is not the only issue, it feels impossible to find a solution and while the fear of running out of money does nothing but make the stress worse. Instead of enjoying some of the best years of their lives, a time period that should be filled with enjoyment, rest, and relaxation has become a burden of ongoing financial distress, and uncertainty.
Your journey toward financial freedom in retirement
Although the EMI Retirement is tragic, retirees can take proactive steps to improve financial consequences and relieve debt stress.
#1. Start Early
The essence of starting early is to benefit from compounding. There is a difference between Ram who at a young age (30) started saving ₹5,000 monthly in a mutual fund for his retirement. Today, Mr. Ram has an amount that is comfortable for him to continue living full-time in retirement and even offer him money needed for healthcare. Starting too late will leave you with no choice but to borrow money to meet the shortfall in your retirement budget.
#2. Diversify Your Assets
Quite often depositors think that fixed deposits or savings accounts will carry them through retirement but they might not be enough. If you invest and contribute to a variety of investments (mutual funds, equity shares, government schemes and pension schemes), thus forming a reinforced retirement corpus, allowing you to beat inflation. Overall, diversification reduces risk and allows money to grow steadily over time.
#3. Budget/Plan
Making a detailed budget allows you to track your income, your ongoing expenses and your debt obligations. For example, Ms. Neela – a 60 year old retiree from Mumbai – was able to reduce some unnecessary spending and reallocate that money to quickly pay-off high-interest loans first. By doing this, she knew immediately what her non-negotiable expenses were and was able to plan her budget better without accumulating additional debt.
#4. Emergency Position
Unexpected emergencies such as healthcare, home repairs, or ill-fated family obligations, can change your well laid plans of retirement. When creating a budget be sure to have an emergency fund for unexpected expense situations or emergencies, it will help to stop you going into post-retirement debt by having to use credit and/or EMIs.
#5. Financial Literacy
When retirees understand some basic principles of personal finance, expenditures, the investing process, and the consequences of poor credit repayment, retirees can be empowered to make their own informed financial decisions. There are 3 methods you can use to improve your financial educability: attend financial workshops, consult your financial advisor and read or listen to trusted financial education resources. In doing so, you will avoid common pitfalls of the retired and create a financially secure retirement.
The growth of “EMI retirement” is a worrying trend in India, suggesting many are entering old age with a lot of debt. Debt is a product of many influences like lack of retirement planning, healthcare costs, inflation and family obligations. Living with EMIs in retirement is more than just a financial burden, it’s a burden on your mind, your independence and your quality of life.
That said, with adequate planning, proper investing, budgeting and understanding money it is possible to minimise the reliance on loans and enable debt free and financially secure retirement. These issues should be tackled now, and in turn should lead you to a retirement that offers comfort, freedom and peace of mind.