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Adequate Retirement Savings

A PPF account is suitable for investors if their current investments are insufficient to take care of retirement…

I have monthly investments of Rs 500 in the NPS, Rs 16,000 in mutual funds and Rs 8,000 in EPF. I do not have a PPF account, do I need a PPF account for my retirement? If I want to open now it will take 15 years to mature. How much do I need to invest in that every month?

Typically in retirement you will need different sources to meet a mix of fixed income and variable income. For instance, pension from your EPF is fixed, whereas the returns from your investments in mutual funds are not. Moreover, when looking at income in retirement, take into account the impact of inflation and the monthly sum that you would definitely need. For instance, you will need Rs 18 to buy something that is available today for Rs 10 in ten years time taking 6 per cent inflation.

Hence, if your current investment is insufficient to take care of your retirement, you should increase your savings and investments towards it. In this context, the PPF (public provident fund) will be suitable, if you are ready to lock-in your funds for 15 years. If you do not have those many years left for retirement, consider increasing existing investments towards retirement.

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