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Why many high-flying Indians are dreaming of a great retirement, but the actual numbers suggest otherwise.
Indians have sky-high expectations for their retirement income, but their savings habits don’t match.
According to Grant Thornton’s Indian Pension Landscape report, more than half of their respondents expect a monthly pension of Rs 1 lakh or more. However, when we look at actual savings patterns, the truth looks a lot less comfortable.
That’s a full-blown chasm between ambition and action.
Why the gap?
While many Indians expect a comfortable retirement, most are saving far too little to make that dream a reality.
Because only 74 per cent of respondents contribute between just 1 and 15 per cent of their salary towards retirement savings, a range that’s far below what’s required for a robust pension.
Even among high earners (those earning above Rs 40 lakh annually, which is 30 per cent of the survey base), 58 per cent contribute only between 1 per cent and 15 per cent of their monthly income.
In fact, the scourge of low savings rate plagues across all income levels, as very few go beyond the 20 per cent savings rate, which is what’s actually required to sustain a large post-retirement corpus.
Why low savings rates fall short
The idea that a 5-10 per cent savings rate is enough is deeply flawed, and the numbers prove it.
We did some data crunching and here’s what we found:
- Saving just 5 per cent of your income for 30 years will only build a corpus 5x your annual expenses — not enough to fund even 10 years of retirement, let alone 25–30.
- Even 10 per cent savings over 30 years gives you only 10x your expenses. Still insufficient.
- To realistically aim for 30x to 40x your annual expenses (a widely recommended rule of thumb), your savings rate needs to be in the 20-30 per cent range, especially if you are starting in your 30s.
The data proves it: small savings rates simply don’t scale over time, no matter how early you start. If you want your retirement years to mirror your working lifestyle, the only way is to start saving more.
Low savings, low pension
It shows how many times your annual expenses you can accumulate based on different savings rates and timelines, assuming a 5% salary hike and 12% returns
| Years to retirement | 5% saving | 10% saving | 15% saving | 20% saving | 30% saving | 40% saving | 50% saving |
|---|---|---|---|---|---|---|---|
| 25 years | 3x | 7x | 11x | 16x | 27x | 42x | 64x |
| 30 years | 5x | 10x | 17x | 23x | 40x | 63x | 94x |
| 35 years | 7x | 15x | 24x | 34x | 58x | 90x | 136x |
| 40 years | 10x | 21x | 34x | 48x | 83x | 129x | 193x |
Growing awareness
While the savings rate may not be top-of-mind for most Indians, the one silver lining is that a majority of respondents appear to be aware of a looming retirement crisis. In the survey, almost 89 per cent of participants said they were not too confident about building a sizable retirement nest egg.
That’s a critical first step, recognising there’s a gap.
The awareness versus action gap is best reflected in the numbers:
- 55 per cent of respondents expect a monthly pension exceeding Rs 1 lakh, showing a strong aspiration for financial independence and comfort in retirement. But only 11 per cent believe their current investments are sufficient to meet those expectations.
That means nearly nine out of 10 respondents are aware they are underprepared.
This wide disconnect highlights the urgent need for better financial literacy, more realistic retirement planning and proactive contribution strategies. The awareness is there — what’s missing is the roadmap. And that’s where tools like retirement calculators, goal-based investing and expert advice come in.
What should we do differently?
- Start early and invest more: Begin retirement saving in your 20s, and increase contributions as your income grows.
- Calculate backwards: Instead of guessing how much you’ll get, set a retirement income goal and work backwards to build the right corpus.
- Diversify beyond EPF and fixed-income options early in life: Add equity mutual funds and the National Pension Scheme to the mix.
We’ve long believed that retirement planning cannot be left to autopilot.
Investors must treat retirement like any other long-term goal — with clear targets, equity exposure in early years, regular reviews and course corrections.
So, if you’re looking for the best equity funds tailored to your risk appetite, you’re in the right place. At Value Research Fund Advisor, we don’t just offer hand-picked fund recommendations — we also help you analyse and optimise your existing portfolio, so your investments stay aligned with your goals.
Whether you’re starting from scratch or fine-tuning what you already have, we’re here to make sure your money works smarter.
Also read: Why Rs 4.33 crore is the new Rs 1 crore for Gen Z investors
This article was originally published on July 08, 2025.
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