Salary Will Stop One Day, Medical Bills Won’t: Why India’s Middle Class Needs a Better Retirement Plan
For most salaried Indians, retirement is still treated as a distant milestone: save through EPF, invest in mutual funds, buy a house and worry about the rest later.
That approach can create a dangerous blind spot.
A salary may stop when employment ends, but expenses do not. Food, electricity, insurance, medicines and healthcare continue. In fact, some expenses can become more important as people grow older.
This is why retirement planning is increasingly shifting from simply building a large corpus to creating a reliable stream of income after the monthly salary disappears.
Recent discussions among Indian wealth managers and fund-industry leaders have highlighted the same problem: a person can be wealthy on paper but financially vulnerable if most of that wealth is locked in property or other assets that do not generate regular cash flow. Edelweiss Asset Management MD and CEO Radhika Gupta has similarly warned that many Indians may reach retirement “asset-rich but income-poor.”
The ₹2 Lakh-a-Month Retirement Question
The number ₹2 lakh per month has recently become part of a wider debate about how much India's urban middle class and affluent households actually need for retirement.
One recent calculation by Dezerv co-founder Sandeep Jethwani created headlines after he argued that a 40-year-old spending ₹2 lakh a month today could require a ₹40 crore corpus by age 60 under a particular set of assumptions. His calculation assumed high lifestyle inflation, a long retirement and other factors that are not applicable to every household.
That ₹40 crore figure should not be interpreted as a universal retirement target.
The important lesson is the calculation behind it.
If someone spends ₹2 lakh a month today, they cannot simply assume that ₹2 lakh will be enough 20 years later. Inflation changes the value of money.
At 6% annual inflation, ₹2 lakh today would become roughly ₹6.4 lakh a month after 20 years.
At 9% inflation, the same spending level would become roughly ₹11.2 lakh a month.
The difference is enormous.
And that is precisely why retirement planning should begin with today's expenses but use future, inflation-adjusted expenses when calculating the required corpus.
Medical Expenses Can Change the Retirement Equation
Retirement has another characteristic that separates it from normal household budgeting: healthcare becomes increasingly important.
During working years, a salaried employee may receive employer-sponsored health insurance. Some companies also provide additional benefits for dependants.
But after retirement, the employer relationship may disappear along with those benefits.
That can leave retirees dependent on personal health insurance, savings and investment income.
A major medical event can also arrive at exactly the wrong time—when the portfolio is already being used to fund monthly expenses.
This creates what financial planners call sequence-of-returns risk.
In simple terms, if a retiree is forced to sell investments after a major market decline to pay for living or medical expenses, the portfolio can suffer more damage than if the same withdrawal happened during a strong market.
That is why retirement portfolios need liquidity rather than being invested entirely for long-term growth.
A ₹5 Crore House Is Not the Same as ₹5 Crore of Retirement Income
This is one of the biggest misconceptions in Indian retirement planning.
Imagine someone owns:
A ₹5 crore house
₹50 lakh worth of gold
₹1 crore in investments
No pension
Limited monthly income
The household may appear extremely wealthy.
But the ₹5 crore house does not automatically pay the monthly grocery bill.
Selling the house could generate cash, but that also means giving up the asset. Renting it out could generate income, but rental yields may not be enough to meet all expenses.
This is why net worth and retirement income are two different concepts.
Radhika Gupta's recent comments on Indian retirement planning have focused on exactly this mismatch. She has argued that investors need to think about liquidity and how assets will eventually produce income, rather than focusing only on the size of their accumulated wealth.
Why ₹2 Crore May Not Be Enough for Everyone
There is no universal retirement corpus.
A person living in a small city with a debt-free house, modest expenses and pension income may need substantially less than someone living in Mumbai or Bengaluru with a premium lifestyle and no guaranteed income.
Recent retirement calculations published by The Economic Times similarly show how dramatically the requirement can change with monthly spending. One analysis suggested that a couple with around ₹1 lakh of monthly expenses could potentially require roughly ₹4–5 crore under its assumptions, while a couple spending ₹2 lakh a month in a high-cost city could require ₹8–10 crore.
These are illustrative estimates, not guarantees.
The point is that retirement planning should start with your own numbers—not a viral ₹5 crore, ₹10 crore, ₹15 crore or ₹40 crore target.
Inflation Is the Silent Retirement Risk
Inflation can be more dangerous than it looks because it works quietly.
Suppose a family needs ₹1 lakh every month today.
At 6% inflation:
After 10 years: roughly ₹1.79 lakh/month
After 20 years: roughly ₹3.21 lakh/month
After 25 years: roughly ₹4.29 lakh/month
This is why someone who says, “I can comfortably live on ₹1 lakh today, so I need ₹1 lakh in retirement,” may be underestimating the problem.
And healthcare costs can behave differently from general consumer inflation.
A retirement plan therefore needs separate consideration for medical emergencies, insurance premiums and long-term healthcare requirements rather than treating healthcare as an ordinary monthly expense.
The Answer Is Not Simply “Invest More”
The natural reaction to retirement anxiety is to chase higher returns.
That can be another mistake.
A retirement portfolio needs to balance growth, stability and liquidity.
During the accumulation phase, younger investors can generally afford a longer investment horizon and may have greater capacity to tolerate equity-market volatility, depending on their circumstances.
As retirement approaches, however, the consequences of a major market fall become more serious.
This is where approaches such as a bucket strategy can become useful.
A simplified structure could contain:
Safety bucket: Money needed for near-term expenses and emergencies.
Income bucket: Relatively stable assets designed to provide predictable cash flow.
Growth bucket: Long-term investments that can potentially outpace inflation and help the portfolio survive a long retirement.
The exact allocation should depend on age, income, risk tolerance, existing assets and future expenses.
SIPs Help Build Wealth—but the Job Is Not Finished
India's SIP culture has become an important part of long-term investing.
Systematic investment plans can help investors invest regularly instead of trying to predict market highs and lows. Gupta has previously described SIPs as a major structural change in Indian investing and has also highlighted the importance of disciplined long-term investing.
But a SIP is only the accumulation mechanism.
Eventually, the investor has to answer a different question:
How will this corpus pay the bills?
That is the transition from wealth creation to retirement-income planning.
A portfolio can grow to ₹3 crore, ₹5 crore or ₹10 crore, but the investor still needs a sensible withdrawal strategy, adequate liquidity and protection against inflation.
What Indian Investors Should Do Before Retirement
The retirement warning does not mean everyone needs to chase an enormous corpus.
Instead, investors should calculate their own retirement number.
Start with current monthly expenses and separate them into:
Essential expenses
Lifestyle expenses
Children's future obligations
Insurance costs
Healthcare and emergency reserves
Housing and debt costs
Then adjust those expenses for inflation and estimate how many years the money may need to last.
It is also important to identify income that may continue after retirement, such as pension, rental income or other reliable sources.
Finally, review whether the portfolio can survive a major market correction without forcing the investor to sell long-term assets at the worst possible time.
The Real Warning: Don't Retire From Income Before You Retire From Work
The biggest takeaway from the current retirement debate is not that every Indian needs ₹40 crore.
It is that retirement planning cannot stop at accumulating assets.
Salary eventually stops. Medical expenses do not. Inflation does not. Insurance premiums do not. Everyday household costs do not.
The financially stronger retirement plan is one where investments have been designed not only to grow but also to provide liquidity and sustainable income when employment income disappears.
For India's middle class, that shift in thinking may be more important than chasing any single retirement-corpus number.
Build wealth, but also build the income system that will replace your salary.
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This article is for informational and educational purposes only and should not be considered investment advice
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