In December 2025, PGIM India Mutual Fund released the Retirement Research Report 2025 – Third Edition. According to the report, only 37% of Indians have a retirement plan. For retirement planning, many people have a “not now, maybe later” mindset. However, the cost of delaying retirement planning can be very high. In this article, we will understand how delaying retirement planning can affect the corpus an individual will accumulate and its impact.
Retirement readiness
Before we get to the cost of delaying retirement planning, let us look at some of the findings of the Retirement Research Report 2025. According to the report, in 2025, ‘Planning for Retirement’ is the number one priority for Indian households. The priority has jumped up from number six in 2023 to number one in 2025, which is good.
While retirement planning is the number one priority, retirement readiness has dropped sharply from 67% in 2023 to 37% in 2025. Only 37% of Indians have a retirement plan. So, the gap between knowing and doing is widening, even as awareness grows. Even though awareness of retirement planning is high, many individuals lag in taking action on building the retirement corpus. The report mentions that retirement planning is not being ignored. It is being postponed, sidestepped, or simply lost in the fog of daily life due to various reasons.
Cost of delaying retirement planning
In the earlier section, we saw how retirement planning is being delayed for various reason. Let us now understand the cost of delaying retirement planning through an example. Surbhi (age 30 years), Shirin (age 35 years), and Lata (age 40 years) want to accumulate a retirement corpus of Rs. 2.5 crores by the age of 60.
They will invest in mutual funds through the monthly systematic investment plan (SIP) route and expect their investments to grow at a 12% CAGR. Let us see how much the required monthly SIP amount will be.
Investor |
Retirement corpus |
Time horizon |
Return CAGR |
Monthly SIP |
|
Surbhi |
Rs. 2.5 crores |
30 years |
12% |
Rs. 7,153 |
|
Shirin |
Rs. 2.5 crores |
25 years |
12% |
Rs. 13,306 |
|
Lata |
Rs. 2.5 crores |
20 years |
12% |
Rs. 25,271 |
Calculator source: https://www.mutualfundssahihai.com/en/calculators/goal-sip-calculator/
The observations from the table above are as follows:
Surbhi starts investing early, at the age of 30 years. Her investments have a 30-year long runway to benefit from the power of compounding. As a result, she can achieve her Rs. 2.5 crores retirement corpus with a monthly SIP of Rs. 7,153, which is possible for many people. Her total investment will be Rs. 25.75 lakhs only. The remaining amount is the return on her investment.
Shirin starts investing a little later, at the age of 35 years. Her investments have a good 25-year runway to benefit from the power of compounding. As a result, she can achieve her Rs. 2.5 crores retirement corpus with a monthly SIP of Rs. 13,306. Shirin starts her retirement investment only 5 years later than Surbhi. However, her monthly SIP investment amount is nearly double that of Surbhi. Her total investment will be Rs. 39.92 lakhs, substantially higher than Surbhi’s investment of Rs. 25.75 lakhs. The remaining amount is the return on her investment.
Lata is the last to start investing, at the age of 40 years. Her investments have a 20-year runway to benefit from the power of compounding. As a result, she can achieve her Rs. 2.5 crores retirement corpus with a monthly SIP of Rs. 25,271. Lata starts her retirement investment 10 years later than Surbhi. However, her monthly SIP investment amount is more than 3 times that of Surbhi. Her total investment will be Rs. 60.65 lakhs, more than double of Surbhi’s investment of Rs. 25.75 lakhs. The remaining amount is the return on her investment.
Power of compounding: Start investing early
We saw that if an individual starts investing early towards their retirement, the corpus can be built with a much lower monthly investment amount. The power of compounding works well in the long run. The longer the investment time horizon, the better the compounding results.
On the other hand, if you start late, your money will have less time to grow and benefit from compounding. As a result, you will have to invest a higher amount. The longer the delay in starting investments, the higher the investment amount required to make up for the time shortfall.
India is one of the fastest-growing economies in the world. In a growing economy like India, equities have historically delivered good returns and created wealth for investors. However, in the short run, equities go through periodic cycles of boom and bust. When you invest in equities for the long term, you give your money enough time to go through multiple cycles of boom and bust. Also, in the long run, volatility evens out.
Retirement planning
To make your retirement planning journey smooth, you may take the following actions:
- Start investing early, preferably as soon as you start earning. With a longer investment time horizon, you will benefit from the power of compounding. We have already discussed the impact of delaying investments.
- Increase your monthly SIP amount by 5% to 10% every year. When you do that, you will be able to build your retirement corpus earlier than a regular monthly SIP with a fixed amount. If you continue investing till retirement with an annual increment in SIP, you will accumulate a higher corpus than a regular monthly SIP with a fixed amount.
- Build a diversified investment portfolio with allocations to equity mutual funds, fixed income, gold, etc. Every asset class plays a distinct role in the investment portfolio. Equity mutual funds are for growth, fixed-income is for stability, and gold is a hedge against inflation and a safe haven against economic uncertainty. We have all heard the saying: “Don’t put all your eggs in one basket”. Similarly, you must avoid taking exposure to only one asset class.
- Make volatility your friend instead of fearing it. Over the course of the year, equity markets experience a 5% to 10% correction almost every year. Every few years, a larger event may lead to a 20% to 40% correction. However, after every fall, markets recover and make new highs. So, market volatility is common. Hence, you should embrace it rather than fearing it. It will help you stay calm during times of market volatility.
- Consult a financial advisor who will create a goal plan for your retirement corpus and handhold you till the goal is achieved.
Enjoy your golden years
Retirement is something that most individuals eagerly look forward to. Many individuals have a long list of things to do after retirement. However, you will be able to accomplish these only when you have planned your investments and accumulated a retirement corpus. Hence, it is important to start retirement planning early and build a corpus so you can enjoy your golden years with the peace of mind you need.
