7 Retirement Mistakes That Cost Crores
Retirement planning mistakes are easy to make—and expensive to fix. Starting late, ignoring inflation, relying on one product, or not having an emergency fund can leave you short by crores. This guide lists seven common mistakes: what they cost, why they happen, and how to avoid them. Use our Retirement Planner to run your numbers and stay on track.
Key Takeaways
- Start early: 5 years delay can cost ₹50L+ in lost compounding. Start by 30
- Factor inflation: Plan for 6% inflation. ₹1L today ≈ ₹3.2L in 20 years
- Diversify: EPF + NPS + mutual funds. Don't rely on one product
- Emergency fund first: 6–12 months expense before aggressive retirement saving
- Review annually: Income, goals, returns change. Re-run numbers every year
Mistake 1: Starting Too Late
The biggest advantage in retirement planning is time. Compounding works best over 20–30 years. If you start at 25 with ₹10,000/month at 10% return, you get ~₹2.3 crore by 60. If you start at 35 with the same amount and return, you get ~₹76 lakh—₹1.5 crore less. Delaying by 10 years can cost you a crore or more. Start as soon as you have a stable income, even if the amount is small. Increase with salary growth.
Mistake 2: Underestimating Expenses
Many people assume 70% of current expense will suffice in retirement. But healthcare costs rise sharply after 60—insurance premiums, out-of-pocket expenses, and care costs. Lifestyle inflation is real: you may want to travel, help children, or maintain a similar standard. A better approach: plan for 80–100% of current expense (in today's rupees), then multiply by inflation. Use 6% inflation for long-term planning. Underestimating by 30% can leave you short by crores.
Mistake 3: Ignoring Inflation
₹1 lakh per month sounds comfortable today. In 25 years at 6% inflation, you'll need ~₹4.3 lakh per month for the same purchasing power. Many people plan in nominal terms and forget that inflation erodes value. Always use real (inflation-adjusted) returns when comparing options, or explicitly model inflation in your projections. Our Retirement Planner factors inflation—use it to see your required corpus in future rupees.
Mistake 4: Relying on a Single Product
EPF alone may not be enough for a comfortable retirement, especially if your basic is low. NPS is market-linked and carries risk. PPF has a 15-year limit. Diversify: EPF (mandatory), NPS (for extra tax saving and growth), and mutual funds (SIP for long-term equity exposure). A mix of fixed income and equity helps balance safety and growth. Don't put everything in one basket.
Mistake 5: No Emergency Fund
If you don't have 6–12 months of expense in liquid form (FD, savings), a job loss or medical emergency can force you to break EPF or stop SIPs—hurting your retirement plan. Build an emergency fund first, then accelerate retirement saving. Keep it in a separate account; don't touch it for discretionary spends.
Mistake 6: Not Reviewing Plans
Life changes: salary grows, family size changes, goals shift. A plan from 5 years ago may be outdated. Review annually: update income, expected returns, retirement age, and expense assumption. Re-run the Retirement Planner and adjust SIPs or allocations. Ignoring this can leave gaps that are hard to fix later.
Mistake 7: Withdrawing Early
EPF withdrawal on job change is tax-free after 5 years—but withdrawing and spending it destroys your retirement corpus. Similarly, stopping SIPs in a market crash locks in losses. Treat retirement corpus as untouchable until retirement. If you need money, use emergency fund or take a loan; don't break retirement savings for short-term wants.
Use Our Retirement Planner
Enter age, retirement age, current expense, expected return, inflation. Get required corpus and monthly SIP. Adjust assumptions and see impact. Plan with data.
Disclaimer
Returns and inflation are assumptions. Past performance doesn't guarantee future results. Consult a financial advisor for your situation.