Can millennials prepare themselves for retirement at 60 by investing Rs 5,000 a month today?

Millennials sandwiched between global recessions, skyrocketing living costs, and lifestyle aspirations often find retirement planning challenging. Can they build a secure future by setting aside just Rs 5,000 a month despite these challenges?

Sanchit Malik, co-founder and CEO of Pazcare, says, "Retirement might seem like a distant milestone for millennials, but in the financial world, time is an ally. The seemingly modest monthly investment of Rs 5,000 can become a potent tool when combined with informed decisions, diversification, and long-term vision. By merging disciplined savings, strategic investing, and personal aspirations, millennials can chart a course to a comfortable and fulfilling retirement."

Regarding planning, one must understand that with life expectancy increasing, the retirement phase will get longer and longer with every passing decade. Retirement planning is one of the most critical goals in our financial plan and should not be approached with back-of-the-envelope calculations on monthly savings or targets.

Thus, to plan your retirement effectively, you will need to consider multiple factors—things like your post-retirement lifestyle, inflation, existing provisioning, and your target retirement age, to name a few. Working with an investing expert to reach your goal and then putting a solid retirement savings plan into motion is the correct approach.

Aniruddha Bose, Chief Business Officer of FinEdge, said, "Millennials are between 25 and 40 years old. A 25-year-old millennial looking to retire by 60 will achieve the equivalent of a Rs 30,000 /month lifestyle for a 20-year retirement phase by investing Rs 5,000 per month aggressively from now until their retirement. This is because Rs 30,000 per month will be equivalent to Rs 2.3 lakh per month in the first year of his retirement! Unfortunately, that’s how inflation works, and this needs to be factored into the plan. A step-up SIP is another solution if the same person wants to achieve a higher retirement target. Since retirement planning is both a long-range and large corpus goal, we typically advise our clients to start with what is comfortable and then implement a disciplined automatic step-up every year. For instance, the same 25-year-old can achieve three times the corpus by starting with Rs 5,000 and then stepping it up by just Rs 2,000 per year. That’s the explosive power of disciplined step-ups."

Thus, one must understand that the desired retirement lifestyle can guide savings and investment choices. Retirement planning should mirror these aspirations, whether travelling, opening a cafe, or simply enjoying a serene life. If starting early, Rs 5,000 may help one achieve their standard retirement goal. However, the investment amount of Rs 5,000 may not be sufficient to fulfil the desired retirement lifestyle one may want to live during their golden years.

"Retirement Planning is a complicated, high-value, and critical life goal. It requires a high degree of planning and focus. We strongly recommend seeking the support of a professional investing expert to help you achieve your desired retirement lifestyle," said Bose.