Are Indians financially prepared for retirement?

For some salaried employees, retirement savings begin automatically through the Employees’ Provident Fund (EPF). Others invest in the National Pension System (NPS), mutual funds, fixed deposits or other financial products. Millions of workers, however, have limited access to formal retirement arrangements and must depend largely on their own savings, family support or continued work.

The issue is not simply whether Indians are saving. It is whether they are saving enough, starting early enough and building a financial plan that can withstand inflation, rising healthcare costs and a retirement that may last 25 years or longer.

Are Indians Financially Prepared for Retirement?

The available evidence points to a gap between awareness and action. Retirement is widely understood as an important financial milestone, yet many people postpone detailed planning while immediate priorities such as home loans, children’s education, household expenses and family responsibilities take precedence.

The 2023 Mercer CFA Institute Global Pension Index placed India 45th among 47 countries. The finding, reported by Morningstar in 2024, highlighted weaknesses in the wider retirement system. It was an assessment of pension-system adequacy, sustainability and integrity, rather than a direct measurement of every Indian household’s personal savings.

Other findings reported during the same period were equally concerning. A study discussed by Morningstar in 2024 reported that nearly half of participants had not started saving for retirement, while 90% of respondents aged 50 and above regretted not having saved earlier.

These figures should be read in their survey context, rather than treated as a current census of India’s entire population. They nevertheless point to a persistent problem: many people recognise the importance of retirement security only when the time available to build it has become shorter.

The more useful question is therefore not whether Indians have heard about retirement planning. It is whether they have translated that awareness into a realistic target, regular contributions and a plan for generating income after employment ends.

The Expectation-Action Gap: Wanting More Than We Prepare For

One of the clearest warning signs is the difference between the retirement income people expect and the savings they believe will deliver it.

A 2025 pension-system analysis by Grant Thornton Bharat reported that more than 55% of respondents expected a monthly pension exceeding ₹1 lakh, while only 11% were confident that their current savings would meet that expectation. The same analysis reported that 74% contributed between 1% and 15% of their income towards retirement funds.

These findings do not mean that every respondent needs a pension of ₹1 lakh a month, or that the same contribution rate is inadequate for every income level. They do highlight the importance of checking whether the retirement income you expect is supported by your actual financial position.

Consider someone who expects to spend ₹1 lakh a month after retirement. The amount required will depend on when retirement begins, how much expenses rise before and during retirement, whether a pension or rental income is available, and how long the money needs to last.

A target chosen without these calculations can create a false sense of security. A target built from expected expenses, other income and a realistic assessment of existing assets gives you something more useful: a way to measure the gap and decide what needs to change.

Why Retirement Preparedness Remains a Challenge

1. Retirement Saving Is Often Postponed

For people in their 20s, 30s and even early 40s, retirement can feel distant. There are more immediate goals to fund, and the money available for saving may already be stretched across several commitments.

Postponement has a cost. Someone who begins investing early has more years in which to contribute, benefit from compounding and adjust their plan if income or circumstances change. Someone who starts in their 50s may need to save a much larger share of income to build a comparable corpus in a shorter period.

Starting early does not require a perfect financial plan or a large initial investment. It requires a sustainable habit that can grow as income rises.

2. A Large Part of the Workforce Lacks Employer-Linked Pension Benefits

India’s employment structure makes retirement planning more complicated than it may appear from the experience of a salaried professional. Many people work in informal employment, self-employment, agriculture, small businesses and other arrangements where regular employer-linked retirement contributions are not available.

India has a substantial informal workforce. Estimates vary according to the definition, data source and reference year, so workforce figures should not be treated as a precise measure of the number of people without retirement savings.

For someone with a formal job, EPF contributions can provide a useful starting point. A self-employed person, shopkeeper, freelancer or daily-wage worker may have to create that discipline independently while managing an income that can vary from month to month.

India has introduced schemes intended to widen pension access, including the Atal Pension Yojana (APY) and the Pradhan Mantri Shram Yogi Maan-Dhan Yojana (PM-SYM). The National Pension System (NPS) also provides a route for eligible individuals to build retirement savings. Awareness, eligibility, affordability and regular contributions remain important to whether these schemes translate into adequate retirement income.

3. Retirement Savings May Be Concentrated in a Few Instruments

EPF, gratuity and NPS are important components of retirement preparation for many employees. A 2025 pension-system analysis by Grant Thornton Bharat reported that 83% of respondents relied mainly on these three sources.

These instruments can play useful roles, but the figure raises a wider question: do people understand how all their assets will work together after retirement?

Retirement readiness is not about collecting the largest possible number of financial products. It is about having a suitable mix of assets, liquidity and dependable income. A household may need growth-oriented investments to help offset inflation, relatively stable assets for near-term spending, accessible emergency savings and a plan for healthcare costs.

The objective is to understand the role of each investment in the overall plan, rather than assuming that one product or pension scheme will meet every future need.

4. Contributions May Not Match the Retirement Goal

Saving regularly is a good start, but the amount saved also matters. A contribution that feels substantial today may still fall short of the eventual requirement if retirement is many years away and living costs continue to rise.

The right contribution rate depends on income, age, existing savings, other financial responsibilities, retirement age and the income expected from pensions or other sources. There is no single percentage that works for everyone.

The practical step is to calculate an approximate target and compare it with your current trajectory. If the gap is large, you can consider increasing contributions gradually, revisiting the retirement date, adjusting future spending expectations or reviewing how your investments are allocated.

5. Inflation Can Make Today’s Retirement Target Misleading

A monthly expense of ₹50,000 today will not necessarily remain ₹50,000 when you retire. General inflation gradually reduces purchasing power, which means a retirement plan based only on today’s expenses can significantly underestimate future needs.

Healthcare adds another layer of uncertainty. Medical expenses, insurance premiums, medicines, diagnostics and hospitalisation may rise at a different pace from everyday household expenses. A retirement plan should therefore consider healthcare separately rather than assuming that one general inflation rate will capture every future cost.

Insurance can help manage certain risks, but it does not eliminate all out-of-pocket expenses. Policy limits, exclusions, co-payments, waiting periods and the availability of suitable cover can all affect how much a household eventually pays.

The longer retirement lasts, the more important these assumptions become. Planning for 25 or 30 years after work requires more than estimating the first year’s budget.

6. Financial Literacy Does Not Always Lead to Action

More people now encounter information about mutual funds, pensions, insurance and retirement planning through digital platforms and financial services. Access to information, however, does not automatically produce a workable plan.

Some people do not know how to estimate their retirement needs. Others assume that property, family wealth or support from their children will be enough. Some delay investing because they believe they need a large amount to begin, while others concentrate on tax-saving products without checking whether their overall retirement requirement is being met.

A useful starting point is to bring the pieces together: expected expenses, existing savings, future contributions, dependable income and the age at which you want work to become optional. This turns a broad concern into a set of questions you can answer and review.

There Has Been Progress, Too

The picture is not entirely negative. India has seen greater public discussion of retirement security, broader participation in pension-linked schemes and policy efforts to extend social protection beyond conventional salaried employment.

Growing Attention to Social Security Savings

PFRDA material published in 2025 highlighted an increase in the share of financial savings allocated to social security, including insurance and pension, from 32% in 2013–14 to 38% in 2023–24. This is an encouraging direction, although the measure should not be confused with the proportion of Indians who are fully prepared for retirement.

Wider Participation in Pension Schemes

The NPS and APY have helped bring pension saving into public discussion. PFRDA reporting in the mid-2020s also highlighted the scale of APY participation, with enrolment having reached around 7.3 crore subscribers by the period cited in the original reporting.

Subscriber numbers matter because they indicate participation, but they do not by themselves establish whether the pension benefit will be sufficient to meet each person’s retirement expenses. The adequacy of future income, the length of the contribution period and the individual’s other resources remain important.

More Focus on Goal-Based Investing

Retirement is increasingly discussed as a financial goal that requires its own time horizon and savings strategy. That is a useful shift away from treating retirement as something that will somehow be funded by whatever money happens to remain at the end of a working life.

For a practical starting point, read GreySmiles’ guide to retirement planning in India. It brings together the key questions around retirement costs, corpus, income, healthcare and the transition from salary to retirement.

What Does Being Financially Prepared for Retirement Actually Mean?

Being financially prepared does not necessarily mean being wealthy or having a particular amount of money in the bank. It means having a realistic understanding of the life you want to fund and a financial structure that can reasonably support it.

For one household, this may include a pension, EPF, a debt-free home and a modest investment portfolio. Another household may need a larger investable corpus because it expects to retire earlier, has no pension income or wants to maintain a higher level of spending.

A useful assessment should consider at least five questions:

• What will retirement cost? Estimate regular expenses, larger one-off costs, healthcare and the effect of inflation.
• What resources are already available? Review EPF, NPS, other investments, pension entitlements, property-related income and accessible savings.
• How large is the gap? Compare the resources likely to be available with the amount needed to support your expected lifestyle.
• How will money be accessed? Consider liquidity, investment risk, tax treatment and how income will be generated after employment ends.
• What happens if circumstances change? Allow for a longer retirement, unexpected healthcare expenses, market volatility or a change in family responsibilities.

Practical Steps to Improve Your Retirement Readiness

Start With a Retirement Target

Estimate your expected retirement spending and adjust it for the number of years remaining before retirement. Then consider how long the money may need to last and what dependable income may be available.

The GreySmiles guide to calculating your retirement corpus in India explains the factors that influence the amount you may need. You can also explore the GreySmiles calculators to examine different assumptions. Treat calculator results as illustrations rather than predictions of investment returns.

Build a Consistent Saving Habit

Choose a contribution that is realistic for your present finances and review it as your income changes. Automating regular savings can reduce the temptation to postpone contributions, while annual reviews help you check whether the amount remains appropriate for your goal.

Look Beyond a Single Retirement Product

Understand the role played by EPF, NPS, mutual funds, fixed deposits and other eligible savings options in your overall plan. Different assets carry different risks, access conditions, tax treatment and potential returns. The objective is to build a mix that matches your circumstances, not to invest in every available product.

Plan for Healthcare and Emergencies

Review existing health insurance, understand its limitations and consider how unexpected medical expenses could affect your savings. Maintain accessible emergency funds where possible so that a sudden expense does not force you to disrupt long-term investments at an inconvenient time.

Review Your Plan Regularly

Retirement planning is not a one-time calculation. Income, expenses, family needs, investments, pension rules and retirement expectations can change. Review your progress at least annually and whenever a major life event changes your financial position.

Conclusion: Awareness Is Only the Beginning

India has made progress in retirement awareness and pension participation, but the available evidence continues to raise concerns about the adequacy of preparation. Historical surveys have highlighted delayed saving, modest contribution levels and a gap between expected retirement income and confidence in achieving it. The large informal workforce adds another challenge because many workers cannot rely on the same employer-linked arrangements available to formal employees.

These findings should not be interpreted as proof that every Indian is financially unprepared. Retirement circumstances vary widely. They do, however, underline why participation in a savings scheme or ownership of a few investments should not automatically be treated as retirement readiness.

Improving preparedness requires consistent saving, a realistic retirement target, an appropriate mix of assets, attention to inflation and healthcare, and a plan for turning accumulated wealth into income. It also requires wider access to suitable pension arrangements for people whose working lives do not include formal employer benefits.

Ultimately, the goal is not simply to accumulate a large number. It is to reach retirement with enough financial resilience to meet everyday needs, deal with unexpected expenses and retain independence and choice throughout later life.

Sources & References

• Mercer CFA Institute Global Pension Index 2023, as reported by Morningstar India in January 2024.
• Morningstar India, “Much Works Required to Improve Retirement in India”, January 2024.
• Grant Thornton Bharat, “Understanding India’s Pension System: Retirement Trends and Readiness”, 2025.
• Pension Fund Regulatory and Development Authority (PFRDA), annual reporting and pension-system information for the relevant reporting periods.
• Right Horizons, analysis of retirement-planning challenges and healthcare costs in India.

Survey findings reflect the specific samples, definitions and reporting periods of the cited studies. They should not be treated as a current census of all Indian households. Pension rules, scheme features and tax provisions can change; check current official information before making financial decisions.