The Layered Approach to Retirement Planning in India: Stop Chasing 10–15 Crores and Start Building Freedom One Step at a Time
You open a retirement calculator, punch in your current expenses, and the screen spits out ₹10 crore… ₹12 crore… sometimes even ₹15 crore.
Your stomach drops. You quietly close the tab and tell yourself, “This is not for people like me.”
The problem isn’t that we earn too little. The problem is that traditional retirement calculators force us to buy our entire dream retirement on day one — groceries, medical emergencies, eating out, vacations, international travel, everything — from the very first month we stop working.
That’s not a plan. That’s a fantasy. And fantasies create paralysis.
Here’s a completely different way to think about retirement that actually works in India: the layered financial freedom ladder.
Instead of one terrifying finish line, you climb five manageable stages. Each stage gives you real peace of mind before you reach the next one. And the best part? Stage 1 — bare survival with dignity — is often far closer than you think.
Stage 1: Bare Essential Freedom (Survival with Dignity)
This is the most important and most misunderstood stage. It doesn’t buy you a luxurious life. It buys you self-respect.
Meet “Monty” — a regular salaried Indian who just wants to never beg, borrow, or tolerate nonsense at work.
His monthly survival budget (today’s prices, family of 3–4, child education handled separately because it ends):
- Groceries & basic food: ₹25,000
- Electricity + water: ₹5,000
- Cooking gas: ₹1,000
- Wi-Fi + phones + basic TV: ₹4,000
- Health + term insurance premiums: ₹5,000
- Fuel (two-wheeler or local transport): ₹2,000
- Medicines + small health expenses: ₹2,000
- House maintenance + miscellaneous: ₹6,000
Total: ₹50,000 per month
No eating out. No movies. No maid. No vacations. No upgrades. This is self-respect money, not happiness money.
Now the magic number.
Assumptions (very India-realistic):
- Retire at 40, live till 80 (40 years)
- Portfolio return: 9% (achievable with 60–70% equity index funds + debt)
- Inflation: 7%
- Real return: 2%
Corpus needed at retirement: ≈ ₹1.7 crore
Not 10. Not 15. 1.7 crore.
When people see this number, something shifts in their brain. The impossible suddenly becomes possible. That mental shift is where real financial freedom begins.
Stage 2: The 10% Health Buffer (Separate Medical Corpus)
Never mix retirement corpus and medical expenses. Insurance reduces risk, but it doesn’t make bills disappear.
Simple rule I follow: Keep at least 10% of your retirement corpus in a completely separate medical buffer (liquid, in debt funds or liquid funds).
For Stage 1 (₹1.7 cr) → ₹15–20 lakh separate for health.
This one decision removes 80% of retirement anxiety for most families.
Stage 3: Making the Plan Robust (Ultra-Conservative Assumptions)
Now that fear is gone, let’s stress-test.
New assumptions:
- Return: 8% (more conservative)
- Life expectancy: 90 (50 years in retirement)
- Inflation still 7%
Corpus needed for the same ₹50,000/month: ≈ ₹2.4 crore
The jump isn’t scary anymore because you already secured Stage 1 in your mind.
Stage 4: Comfortable Freedom
Work isn’t killing you anymore. You want occasional eating out, a maid, movies, small upgrades, and one domestic vacation a year.
Expenses rise to ₹1 lakh per month.
Using original assumptions → ≈ ₹4.8 crore
Stage 5: Luxury / Ultra-Safe Freedom
You want zero stress. You assume portfolio only matches inflation (7% return = 0% real return) and plan for 50 years.
- ₹50,000/month → ₹3 crore
- ₹1 lakh/month → ₹6 crore
If your retirement plan includes vacations and luxury before you have secured bare survival and medical safety, you don’t have a plan. You have anxiety wearing a spreadsheet.
Stop asking: “How much do I need for everything in life?”
Start asking: “What is the next layer I need to secure?”
Build it in the right order — survival → medical → robust → comfort → luxury — and you will reach financial freedom much faster than the scary calculators want you to believe.
Start with Stage 1.
The rest will feel surprisingly doable once the first layer is in place.
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Disclaimer: This is not financial advice. Numbers are illustrative based on reasonable assumptions. Past performance is no guarantee of future results. Please consult a SEBI-registered financial advisor before making any decisions.
