Why retiring on Rs 1 crore could be your biggest financial mistake

Think back to the era of your parents. Exotic holidays were rare, going out to eat was a monthly extravagance, and success was ownership of a car. Today, all those things are common place to most urban families. Lifestyles have changed, and the costs associated with maintaining them have changed also.

This is why the long revered retirement gift of ₹1 Crore is no longer a guaranteed peace-of-mind. What might have been a lot of money 10, or 20 years ago, today barely covers your healthcare costs, kids schooling, or the costs of living the lifestyle most families desire.

Retirement planning is no longer about chasing an arbitrary number; it is about future-proofing your life against inflation, your dreams, your future changes, and uncertainty. The goalposts have changed, and the mindset also has to change.

How Yesterday’s Retirement Benchmark is Failing Today

Inflation’s Invisible Thief: Twenty years ago, what felt like a “sufficient” retirement corpus could, with some reasonable spending, cover household expenses, medical expenses, and leisure for a few years without much concern.

Today, it will hardly last any time. The difference due to the impact of inflation. The price of everything, from grocery bills to fuel, steadily rises. In fact, healthcare inflation in India is accelerating at nearly 12–14% per annum. A medical procedure, which could have once cost a few lakhs, will now cost three or four times that. What was once an amount that could provide relief is now a passing payment.

Longer Life Expectancy and Longer Duration of Retirement: Life expectancy in India has changed drastically from just over 62 years in 1990 to over 70 years today. While many people live into their 80s, a retirement pension was not designed to last that long.

Retirees, in many instances, are no longer tapering down their careers for a short 8–10 years. With greater numbers emerging from the workforce and spending far longer in retirement, individuals should now reflect on funding the better part of a third of their lives—without active income. The sufficient corpus of yesteryear will simply not stretch across these additional decades of living expenses, medical expenses, and lifestyle needs.

The Disappearance of Retirement: Living in retirement has changed as well. We all have heard stories of previous generations living comfortably—lots of family visits, small trips and modest conveniences — but today’s retirees want much more. Travel, hobbies, access to a range of digital revenues, medical care, and even wellness—these are examples of lifestyle changes. As such, yesterday’s benchmarks are out of touch in guiding individuals towards the monthly reality of modern retirement.

Why Yesterday’s Security Isn’t Enough Today

A generation ago, retirement looked completely different. Living costs were low, modest medical costs, and lower life expectancy meant even a modest nest would last a person decades. Now, we fast forward to today, and the same comfort is going to take more. A lot more. Especially in metros, where rising healthcare, housing, and living costs, taking a retirement corpus will evaporate faster than anyone would have thought.

Psychological Reassurance: For many, ₹1 crore has become the philosophical number, a figure that feels safe and substantial. It provides psychological comfort as reassurance—when thinking about retirement, people feel they “made it”. However, it may reassure the mind but not the wallet. Actual security is very much related to that number, but ultimately, it very much depends on if it aligns well with future anticipated costs.

Cost of Living Alignment: Current monthly household expenses are often over ₹50,000. If ₹1 crore is prudently invested, just about, it may pay for monthly expenses but currently gives little comfort against inflation. Over a 20–25 year retirement period, inflation will erode purchasing power so not only is ₹1 crore going to feel like a distant dream, it is barely a starting point.

Geography: Where a person retires can have an impact on financial security. In smaller towns, ₹1 crore can happily fund a basic steady lifestyle for several years. In big cities, ₹1 crore can diminish very quickly with rising rents, healthcare costs, and the inevitable lifestyle expense of living in the city.

The Bitter Truth: What was once seen as a life’s long guarantee is now just the baseline. Rising prices, a longer period of retirement, and additional medical costs now mean that even a crore does not stretch the way it used to. Financial security in today’s world takes discipline in saving, and disciplined smart investments, that will outpace inflation.

Thinking Beyond the ₹1 Crore Paradigm

The most frequently seen retirement mistake is to view ₹1 crore as a finish line, or perhaps the magic number to give the retiree comfort. Certainly, it should be viewed as the starting point for a long-term vision. Here are some ideas to help you get beyond the number so that your retirement can truly be secure.

#1. Think in Future Value, Not Today’s Rupees

What feels like enough today may feel very different some twenty years from now. For example, a household that feels okay on ₹50,000 a month may need ₹1.5 lakh or more in the future, because of inflation. This is why retirement planning needs to always be done in terms of future-adjusted values. Some calculations can help you get closer to this gap (i.e., retirement calculators.)

#2. Think Growth Investments

If you continue to leave your retirement savings in poor-yielding products (e.g., Fixed Deposits) you are really going to lose purchasing power with time. The more the time to retirement, the more the loss in purchasing power. You have to plan for growth and safety which could be achieved through equity mutual funds, NPS, debt securities, annuity products. Equities give you long-term investment growth and debt gives you safety. Your balance should vary as you age, but you should never totally disregard growth.