How to Know If You Are On Track for Retirement
Table of Contents
Discover how to know if you are truly on track for retirement. Learn practical benchmarks, savings rules, and expert strategies to secure your financial future in India.
Retirement planning is one of those things we all know we should do, but let’s be honest most of us aren’t sure if we are actually doing it right. You might be contributing to your EPF every month, maybe you have got a few mutual funds running, and you tell yourself you are “saving for retirement.” But here’s the million-rupee question. are you really on track, or are you just hoping for the best.
The difference between hoping and knowing can mean the difference between a comfortable retirement and financial stress in your golden years. I have been advising clients on retirement planning for years, and I can tell you that the people who retire confidently aren’t necessarily the ones who earned the most they are the ones who planned the smartest.
So let’s cut through the confusion and talk about how you can actually know whether your retirement planning is on point. No jargon, no complicated formulas just practical, actionable insights that work in the Indian context.
1. You Have a Clear Retirement Number (Not a Guess)
Here’s where most people get it wrong from the start. Ask someone how much they need for retirement, and you’ll typically hear something vague like “maybe a crore or two” or “as much as possible.” That’s not a plan that’s wishful thinking.
Knowing if you are on track for retirement starts with knowing your destination. You wouldn’t start a road trip without knowing where you’re going, right? Same principle applies here.
Your retirement corpus isn’t a random number plucked from thin air. It’s based on actual calculations involving your expected monthly expenses after retirement, the impact of inflation over the years, when you plan to retire, and how long your savings need to last. Most financial planners suggest planning till age 90 or even 95, because we are living longer than previous generations.
Here’s a practical rule that works well for most people. you’ll need roughly 25 to 30 times your expected annual expenses at retirement. Let me break this down with a real example.
Suppose you estimate you’ll need ₹6 lakh per year to maintain your lifestyle after retirement. Multiply that by 25, and you get ₹1.5 crore. Multiply by 30, and you are looking at ₹1.8 crore. But remember, this is in today’s money. If you are retiring 20 years from now, inflation will have increased that amount significantly.
If you have already done this calculation and have a specific number you are working towards, congratulations you are already ahead of 80% of people planning for retirement. If you haven’t, this needs to be your first priority.
2. Your Current Savings Are Aligned With Your Age
One of the best ways to know if you are on track for retirement is to check whether your current savings match where you should be at your age. Think of this as checkpoints on your retirement journey.
Financial advisors use age-based benchmarks to gauge retirement readiness. These aren’t strict rules set in stone, but they are excellent guidelines that have proven effective across thousands of retirement plans.
By the time you are 30, you should ideally have saved at least one times your annual income. So if yo are earning ₹8 lakh a year, you should have around ₹8 lakh saved specifically for retirement.
Fast forward to 40, and that multiplier jumps to 3-4 times your annual income. At 50, you are looking at 6-8 times, and by 60, you should be sitting on 10-12 times your annual income in retirement savings.
Now, I know what you are thinking “I am nowhere near these numbers!” Don’t panic. These benchmarks account for people who started saving early. If you started late, you’ll need to save more aggressively to catch up, but it’s definitely doable with the right strategy and discipline.
The key insight here is awareness. If you are significantly behind these benchmarks, that’s not a failure it’s valuable information telling you that course correction is needed. Maybe you need to increase your monthly investments, or perhaps you need to adjust your retirement lifestyle expectations. Both are valid options.
3. You Are Investing Consistently, Not Sporadically
Let me share something I see all the time. people who invest enthusiastically for a few months, then stop when unexpected expenses come up, start again six months later, pause during a market downturn because they are nervous, and then restart when markets are booming.
This on-again, off-again approach is retirement planning kryptonite.
Being on track for retirement requires consistency above almost everything else. The magic of compound interest which Albert Einstein supposedly called the eighth wonder of the world only works when your money has time to grow uninterrupted.
You are in good shape if you invest every single month through Systematic Investment Plans or automated contributions that happen whether you think about them or not. Your retirement investments should continue flowing even when markets are volatile and news headlines are scary. In fact, market downturns are when yo are buying units at lower prices that’s a good thing for long-term investors.
Another sign of consistency is increasing your contributions when your income rises. Got a salary hike. Fantastic allocate at least 30-40% of that increase toward your retirement investments before you get used to spending it elsewhere.
If your investments freeze every time expenses increase or markets drop, your retirement plan is built on shaky ground. The expenses will keep coming, and markets will keep fluctuating that’s guaranteed. What matters is whether your commitment to your future self remains steady.
4. Your Asset Allocation Matches Your Time Horizon
Here’s a truth that surprises many people. you can be saving diligently and still fall short of your retirement goals if your money is sitting in the wrong places.
I have met people in their 30s with 15-20 years until retirement who keep everything in fixed deposits earning 6-7% returns. Meanwhile, inflation is running at 6%, and healthcare inflation is at 10-12%. Their money is barely staying even with inflation, let alone growing to build a retirement corpus.
On the flip side, I have also seen people five years from retirement with 90% of their money in equity mutual funds. One bad market year right before retirement could seriously damage their plans.
Knowing if you are on track for retirement means having the right asset allocation for your specific timeline. When retirement is still 15-20 years away, you should have higher equity exposure typically 70-80% of your retirement portfolio. Equity investments are volatile in the short term but historically provide inflation-beating returns over long periods.
As you get closer to retirement say within 5-10 years. you should gradually shift toward more stable investments like debt funds, PPF, and fixed income products. This is called de-risking, and it protects your accumulated corpus from sudden market crashes when you don’t have time to recover.
A healthy retirement portfolio isn’t just EPF in isolation or just mutual funds. It’s EPF, PPF, NPS, mutual funds, and maybe some other instruments working together in harmony based on your age and risk profile.
5. You Have Accounted for Inflation (Especially Medical Costs)
This is where many retirement plans fall apart spectacularly.
People calculate that they need ₹40,000 per month today, multiply that out for 30 years, and think they are done. But they’ve forgotten that ₹40,000 today won’t buy the same things 20 years from now.
In India, general inflation typically runs around 5-6% annually. That means prices double roughly every 12-14 years. Medical inflation is even worse running at 10-12% or sometimes higher. Healthcare costs double every 6-7 years at that rate.
Think about what you paid for a doctor’s consultation ten years ago versus today. Think about hospital room charges, diagnostic tests, medicines. The difference is staggering, and this trend will continue.
A retirement plan that’s truly on track must increase your future expense estimates for inflation. It should include separate planning for healthcare costs, not just lump them in with general expenses. You need comprehensive health insurance that covers you well into your 80s and beyond, plus an emergency medical fund that can handle deductibles and non-covered expenses.
If your retirement calculations assume that today’s expenses will remain constant or only increase slightly, you are setting yourself up for a painful surprise.
6. You Are Not Relying on Children or One Income Source
Let’s talk about something culturally sensitive but financially important. relying on your children for retirement support.
Traditional Indian values emphasize children taking care of parents, and there’s nothing wrong with family support. But from a financial planning perspective, counting on your children’s future earnings as part of your retirement plan is risky.
Your children will have their own financial pressures home loans, their children’s education, career uncertainties. Building your retirement on assumptions about their ability and willingness to support you financially isn’t a solid strategy.
A retirement plan that’s truly on track is self-sufficient. It doesn’t depend on your children stepping in to fill gaps. It’s built on multiple income sources you control. pension income, annuity payments, Systematic Withdrawal Plans from mutual funds, rental income from property, interest from fixed deposits.
Relying solely on EPF or a single investment is equally problematic. What if that one source doesn’t perform as expected? What if regulations change? What if there’s an emergency that forces you to withdraw more than planned?
Diversification isn’t just about asset allocation—it’s about income source allocation too.
7. You Review Your Retirement Plan Periodically
Your retirement plan isn’t a “set it and forget it” affair like a fixed deposit.
Life changes constantly. Your salary increases, you might change jobs, you might start a business, you get married, children arrive, you take on a home loan, health issues emerge. Each of these events impacts your retirement planning in some way.
You are on track if you review your retirement goals every one to two years. During these reviews, adjust for salary hikes, reassess your expense estimates, recalculate your corpus target accounting for inflation, and rebalance your portfolio if needed.
Major life events demand immediate plan reviews. Got married? Your retirement expenses just changed. Had a child? Education costs will impact your savings rate for years. Diagnosed with a chronic condition? Medical planning becomes more critical.
A retirement plan created once and never reviewed becomes outdated quickly. It’s like using a ten-year-old map to navigate the destination might be the same, but the best route has probably changed.
8. You Know What to Do If You're Falling Short
Here’s the final and perhaps most important indicator. being on track doesn’t mean everything’s perfect. It means you have the awareness and knowledge to fix problems when they arise.
Maybe you started late. Maybe you had some years where you couldn’t save much. Maybe your investments haven’t performed as well as expected. These things happen to everyone.
The question is do you know how to course-correct?
If you are behind your benchmarks, you have several levers to pull. You can increase your SIP amounts to save more aggressively. You can consider delaying retirement by a few years, which both gives your corpus more time to grow and reduces the years you’ll need to fund. You can adjust your planned retirement lifestyle to require less annual income. You can optimize taxes to invest more efficiently. You can rebalance your portfolio toward higher-growth investments if you still have time.
Awareness and timely action matter far more than having started perfectly.
Final Thoughts
Knowing whether you are on track for retirement isn’t about comparing your progress to your friends or neighbors. It’s about having clarity on your specific goals, maintaining consistency in your approach, and staying in control of your financial future.
If you know your retirement number, invest regularly with the right mix of assets, account for inflation and healthcare costs, and review and adjust your plan periodically, you are already ahead of the majority.
Retirement isn’t some distant destination that suddenly appears one day when you turn 60. It’s a journey you prepare for quietly and consistently, year after year, decision after decision.
The best time to start was twenty years ago. The second-best time is today. Whether you are perfectly on track or need some adjustments, taking control of your retirement planning now will make all the difference when your golden years finally arrive.
FAQs
How can I check if I am on track for retirement?
How much retirement corpus do I need in India?
What is the right age to start retirement planning?
The best age to start retirement planning is as early as possible, ideally in your 20s or early 30s. Early planning allows compounding to work in your favor and reduces the pressure to invest large amounts later in life.