Times have changed. With better healthcare, awareness, and lifestyles, people today live longer than before. But a longer life also means a longer stretch of time where your money needs to do the heavy lifting—cover daily expenses, handle rising costs and still leave room for comfort and choice. The older ways of planning for retirement weren’t built with this kind of timeline in mind. In this blog, we look at how retirement planning has moved forward and why newer plans are better suited to support the financial needs of a life that spans decades, not just years.
Traditional retirement plans
What they include:
- Government pension plans
- Provident Fund (EPF/PPF)
- Gratuity
- LIC endowment pension policy in India
- Senior Citizen Savings Scheme (SCSS)
How they work:
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25 July 2025
Traditional retirement plans are primarily designed to offer guaranteed returns and capital protection. They are mostly backed by the government or employer contributions, making them reliable for fixed post-retirement income.
Pros:
- Low risk, with guaranteed returns
- Suitable for conservative investors
- Simple to understand and manage
Limitations:
- Limited flexibility once the plan starts
- Returns often don’t keep up with inflation
- Designed for shorter retirement spans
- Mostly depend on fixed interest rates and external contributions
Real-life example:
A government employee retiring at 60 receives a pension and has accumulated funds through EPF. While this provides a steady monthly income, it may fall short 15–20 years later due to rising costs and no inflation adjustment.
Modern retirement plans
What they include:
- National Pension System (NPS)
- Guaranteed Income Plans
- ULIP-based Pension Plans
- Annuities with increasing payouts
- Mutual Fund Systematic Withdrawal Plans (SWPs)
How they work:
Modern plans offer a mix of fixed and market-linked options, allowing better flexibility, customisation and long-term growth. They are designed to keep longer life expectancy and evolving retirement goals in mind.
Pros:
- Flexibility in contribution, withdrawal and investment style
- Options to fight inflation with increasing income or market-linked returns
- Better suited for changing financial needs over time
- Goal-based planning for healthcare, lifestyle and legacy
Limitations:
- Some plans require market awareness and active decision-making
- Potential risk in equity-linked components (unless guaranteed)
- Not all options are tax-free upon withdrawal
Real-life example:
A private sector employee starts contributing to NPS in their early 30s. Upon retirement, they use part of the corpus to buy an annuity that offers rising payouts. This provides a regular income that keeps pace with rising expenses, well into their 80s or 90s.
How to Plan for Retirement Today
Planning for retirement is no longer just about putting money aside—it’s about knowing how much you’ll need, when you’ll need it and how to make your money last. Whether you prefer guaranteed returns, market-linked growth or a mix of both, a clear plan helps you stay in control. Here are some key steps:
- Estimate how much you’ll need each month
Start with your expected lifestyle after retirement. Include everyday expenses, healthcare, travel and emergencies. Think long-term, because retirement can easily stretch over two or three decades.
- Account for inflation
What seems like enough today may not hold up 20 years later. Choose plans that either grow your money or increase your payout over time. This is where modern options with inflation-adjusted income can help.
- Diversify your investments
Relying on a single plan isn’t wise. Combine safe options like PPF or annuities with flexible ones like NPS or mutual fund SWPs. This gives you both stability and growth.
- Know your retirement gap
With a retirement calculator in India, you can check how much you’ll actually need vs how much you’re saving. These tools factor in age, income, inflation and expected expenses to show whether your current savings are on track.
- Review and adjust
Retirement planning isn’t a one-time task. Revisit your goals every few years, especially after major life changes. Increase your contributions or shift your investments if needed.
Wrapping up
Planning for retirement is no longer just about saving—it’s about making informed choices that align with the life you want to live later. With so many options now available, it’s worth spending time to understand how each plan works and what suits your needs best. Look beyond just returns; consider flexibility, payout structure and long-term stability. Browse different providers, compare what they offer and see how well they support your future lifestyle. A thoughtful plan made today can give you the freedom and peace of mind to enjoy the years ahead without financial stress.
