How to plan for retirement at the age of 35 in India

plan for retirement

Retirement is a critical juncture in one’s lifetime. For an event so important, thinking and planning must start at the right time. The sooner the better, and therefore, it is important to know how to plan for retirement at the age of 35 in India.

In your 20’s or 30’s, retirement may look like a distant goal post. To be honest, at that age, its an alien subject to most. Financial planning is yet uncertain, and you are often spending more than you are saving. Despite the uncertainty and scarcity of resources, starting right after you begin your career is still the best strategy.

In hindsight, you will understand how an early start turns out to your advantage. Most importantly, you can efficiently manage any pitfalls in the future. Since the investment tenure is long enough, you can make adjustments if it derails temporarily. Also, early investing helps you take the maximum advantage of compounding returns.

Here are the seven important steps to follow:

1.     Make appropriate retirement contributions

For salaried investors, contribution to provident fund (PF) is straight forward and happens automatically as per the statute. Further, there are options to increase the retiral savings through investing in National Pension Scheme (NPS), Public Provident Fund (PPF) or Voluntary Contribution to Provident Fund (VPF), etc.

Self-employed investors should consider a Public Provident Fund (PPF) account. This savings option locks in money and earns a decent risk-free return. Forcibly saving money also prevents any unjustified spending and eventually contributes to financial retirement goal.

Savings in retiral benefits should be in the range of 5-10% of the total income.

There are several other options like mutual funds or direct equity investing to save for future. Still, these traditional, almost risk-free instruments are highly recommended. Savings options like public provident fund, provident fund, provide capital security and are certainly worth a place in the retirement portfolio.

2.     Plan to own a house of yourself

Traditionally owning a house has been an essential item on the to-do list as a person progressed in life. This recommendation would have been irrelevant a few years ago when buying a home held the top spot in investors agenda.

The generation has changed, and so have the thoughts. Millennials often do not want to commit to costly and long-term decisions like buying a house. They instead would prioritize spending on travel, entertainment and on leisure.

It’s a change in thought process. The way of life is anyone’s personal decision, as long as that does not leave you vulnerable (in this case without a house) in the future years. If you are amongst those who do not want to commit to property purchase, you must plan for the resources to execute an asset purchase at a later date, if need be.

The location where to own a house is also critical. It may be worth noting that workplace cities are often not the final destination where one would like to settle post- retirement. In such cases renting a house may make more sense in work cities.

A significant advantage of buying a house in your 30’s is that paying off a house loan gets more manageable as you progress in your career. The tax benefits on interest and principal loan payment are to encourage people to invest in a house. The flip side is that your loan eligibility will be low initially, and buying a home that serves future needs may not be possible. However, trading a smaller house for another with a small additional investment is always a possibility.

An increase in property prices raises your net worth, even if you will not sell a house purchased for end-use. Further, the feeling of owning a property is soothing and, at times, linked to societal respect.

3.     Invest in equity to accrue a grander sum

Investing in the equities asset class is relatively risky. Still, a well-thought after plan can help you manage that risk. To approach equity investing via the mutual fund route is often a recommended option. Professional asset managers implement goal-based investment strategies to deliver desirable returns.

An age-based fund allocation approach usually works. The base assumption is that your risk tolerance is indirectly proportional to your age, i.e., as the age progresses, risk appetite decreases.

% of investment into equity = 2X the balance number of earning years

The table below should help in the easy adoption of this concept:

Equity investing

Risk appetite does not necessarily reduce to NIL with age. Still, it is prudent not to allocate new investible funds into equities. A self-employed investor must boil down to a number (age) to which the investor can continue to work. Consider that as the retirement age.

Do read about the possibility of ‘How to accumulate Rs 1 crore in 10 years.‘ The article explains how one can accumulate Rs 1 crore by investing Rs 36,500 per month for ten years at a 15% annualized rate of return. At a 10% annualized rate of return, the investment per month increases to around Rs 49,000. A few examples of well-performing mutual funds are also added. Using the example for ten years, just imagine the amount one can accumulate when the time horizon is 30-35 years.

4.     Start early to maximize the compounding gains

The power of compounding is a straightforward but crucial concept in investing. The compounding occurs through the reinvestment of income. The income on investment gets reinvested and further earns income, and this sequence continues until the original investment exists.

Those who start to invest at the age of 30 earn significantly higher returns than those who begin later. And that is because of the power of compounding returns.

The sooner you start to invest, the higher the compounding benefits you achieve.

Read here about the ‘Power of compounding and the benefits of early investing.

5.     Create a secondary source of income and never keep money idle

Always plan savings as a percentage of total inflows. Net savings should not be residual income after meeting household and entertainment expenses.

These savings should then get invested based on the investment plan. Additional income generated from these investments is called secondary income. Your focus should be to develop such other sources of income.

In this process, to keep money idle in the savings bank account is a criminal waste of opportunity. Although it sounds trivial, income from idle money could add up to a significant amount over the years if invested in a liquid or debt fund.

Save money religiously, and to reap the benefits, invest it systematically.

6.     Plan your leverage and create an emergency fund

Debt is a popular way to upgrade lifestyle and fulfil dreams. However, interest paid on a loan is a cost and impacts finances. With proper financial planning, you can take leverage and use it to your advantage, but there must be a well-defined plan to retire the debt well in time.

Create an emergency fund equal to 12-18 months of living expenses and take adequate health and life insurance. These funds and insurance will safeguard you from any unplanned expenses, protect your savings and the retirement plan to get derailed.

7.     SIP your way into the future

Systematic Investment Plan (SIP) is the best way forward to ensure regimented investments happen over a long period.

Firstly, SIP spreads the investment into small instalments. Secondly, the cost of ownership gets averaged over the ups and downs of the market, leading to gains over time. Thirdly, investors can choose from dozens of mutual fund options. And finally, mutual funds are managed by professional money managers. There is insignificant intervention required to handle SIPs apart from an annual portfolio review and any rebalancing if the need arises.

Here are a few salient features of SIP as:

  • An equal sum of money gets invested on pre-defined dates
  • The investment happens in the same security/fund
  • Regular investing averages the cost of ownership over a long period
  • Investing through SIP does not require constant supervision
  • Outflows on scheduled dates promote a regimented savings behaviour
  • Investors achieve benefits of compounding returns as interest/ dividends get reinvested in growth plans

Investment in the mutual fund is a long-term game, and it is not desirable to constantly watch the fund performance. However, investors must conduct at least an annual review of the portfolio. To exit investments that flounder must be a part of the overall investment strategy. Read ‘When to sell mutual funds to know more about the exit strategies.

To summarize on how to plan for retirement at an early age

Retirement is an eventuality, and the time will come. What we can do is to take pointed actions to guide us securely into that reality.

As a thumb rule, always think long term during this process. Follow a regimented savings schedule and make suitable investments to accumulate a large enough corpus. Do consider reading ‘How much money do you require to retire in India.

Monitor the investment performance each year and make necessary corrections to stay on the right way forward. Shift your investments from equity (riskier asset class) to debt mutual funds or bank deposits (less aggressive asset class) at the right time. Shift asset classes as you age and your risk tolerance decreases. There will be a need to move investments from a riskier category to less risky investment options.

Think about how to plan for retirement at the age of 35, make an investment plan, and empower yourself to retire comfortably. Start early and trust your plan. Remain consistent with your investment strategy and stay invested!

The author is a senior finance professional with over fifteen years of work experience in corporate finance and has an affinity for personal finance and investment management. Please leave your comment or share thoughts on this article via email at For more articles, please visit the website


The author has used his knowledge, experience, and understanding of the subject to write this article. Any views, opinions, and thoughts mentioned in the article belong solely to the author and not necessarily to the author’s employer (past or current), organization, committee, or other group or individual.

Under any circumstances, the author shall not be liable for any views or analysis expressed in this note. Further, the opinions expressed are not binding on any authority or Court. We advise readers to consult their financial advisor for assistance in their specific case.

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2 Replies to “How to plan for retirement at the age of 35 in India”

  1. Very helpful and reassuring points. There are few open elements i want to evaluate further. Like direct equity exposure vs fund of funds vs hybrid funds.

    How can one really take this strategy to an elevated levels of serious ROIs in the bound manner. What are AMS and are they useful?

    Also apart from equity what should be the investment strategy for 12-18 months Corpus? Liquid fund,FD or fixed asset rentals? We should be prepared n not surprised for another blackswan event.

    Lastly, how about investing in US stocks, bitcoins and small investments in budding startups!

    1. Thank you Kunal for your kind comments.
      Some of the questions are advanced financial decisions, and I will evaluate in due course of time.
      For the question on direct equity vs mutual fund, you may visit link here – Stocks vs Mutual Funds; which is better?. Fund of funds must be evaluated similar to any mutual fund, with some additional administrative charges.

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