How to ensure you don’t outlive your savings

Let’s face it: we’re living longer than ever before. Thanks to better healthcare and living standards, India’s life expectancy is steadily rising; it’s already around 72.5 years and is expected to cross 85 by the end of this century. That’s great news, but it also means we’ll be spending many more years in retirement. By 2050, nearly 1 in 5 Indians will be over 60. That’s a big shift, and it calls for a serious rethink of how we plan our finances, especially for the years when our regular income stops.

Many of us are getting better at financial planning, we start saving early for things like buying a home, funding our children’s education, or even that long-dreamed-of vacation. But one crucial life goal that often gets pushed down the list is retirement. And with people living well into their 80s or even 90s, the risk of outliving our savings is more real than we think.

Why bother

We’re all hoping for a long, healthy life. But that also means our retirement savings need to last much longer than they did for previous generations. If you retire at 60 and live to 90, you’ll need your money to stretch across 30 years, with no salary to rely on.

Rising inflation: Inflation doesn’t stop when you retire. It often hits harder. Everyday expenses, from groceries to transport to hospital bills, keep climbing. A modest estimate puts the cost of food for two people over 30 years at around Rs 65 lakh. That’s just food, without factoring in inflation or any other expenses.

Evolving family dynamics: The traditional joint family setup, where ageing parents could rely on children for financial support, is becoming less common. Today’s nuclear families are more independent, and it’s no longer safe to assume your children will—or even can—support you in your retirement years.

Medical uncertainties: As we grow older, our medical needs usually increase. Healthcare can become one of the biggest retirement expenses, from routine check-ups to major treatments. Without proper planning or insurance, unexpected medical bills can drain your savings in no time.

Limited pension coverage: Unlike many Western nations, India still lacks a comprehensive, government-backed pension system for the majority. Unless you’ve worked in government service or specific sectors, chances are your retirement income will depend almost entirely on your own savings and investments.

How to make your money last

The key to avoiding financial stress in retirement is simple: start planning early and be intentional about where you invest. Begin by figuring out how many active earning years you have left, then consider the lifestyle you want after you retire. Most importantly, remember to factor in inflation. What seems like a comfortable amount today might not hold up 20 years from now.

While many people turn to mutual funds, fixed deposits, or SIPs for savings, it is smart to invest in retirement-specific products. These help you stay disciplined and keep your retirement money untouched until you actually need it.

Some tools that can help –

National Pension Scheme (NPS): This solid, government-backed plan allows up to 75% of your contributions to be invested in market-linked instruments, with the rest in safer debt options. Once you hit 60, at least 40% of the corpus goes into an annuity, giving you a steady, guaranteed income for life. The rest, up to 60%, can be withdrawn tax-free. The flexibility of partial withdrawals is also allowed for specific life events.

Unit Linked Pension Plans: These are offered by insurance companies (regulated by IRDAI) and work much like NPS but with added flexibility. You can invest up to 100% of your contributions in equity or shift to debt based on your risk appetite. You can also tailor your plan to retire earlier or later, depending on your career path. Just like NPS, 40% of your savings is converted into annuity at maturity to ensure a lifelong guaranteed income. The remaining 60% can be withdrawn tax-free.

Other options: If you’re more risk-averse, you might consider the Atal Pension Yojana (APY) or guaranteed annuity plans that offer Regular Guaranteed payouts for life. These may not offer high returns, but they give peace of mind with predictable income.

It’s never too early

We often hear the phrase “live in the moment,” but when it comes to retirement planning, living in the moment shouldn’t mean ignoring the future. Your golden years can be some of the best years of your life, if you’ve planned for them well.

The truth is, you don’t want to be in a situation where you’re forced to compromise your lifestyle or rely on others because your savings have run out. Start early, choose the right mix of products, and stay the course. That way, you’re not just planning for retirement—you’re planning for freedom, dignity, and peace of mind.

(The author is Chief Business Officer, Life Insurance, Policybazaar.com)