Late to retirement planning? How to catch up, build corpus, avoid mistakes

You may need to save a higher portion of your income to build a retirement portfolio

If you feel like you’ve started retirement planning late, you are not alone. A lot of people only begin to think about it seriously in their 40s or even 50s. Yes, starting early would have helped. But starting now still matters. In fact, at this stage, your income is usually higher, which gives you a chance to save more aggressively and make smarter decisions. The approach just changes. Instead of relying only on time, you focus more on discipline, allocation, and avoiding mistakes.

 

How to estimate corpus

The first step is to get a rough idea of how much you will need.

 

 

This is your retirement corpus: The total savings that will support your expenses after you stop earning.

 

Start with your current monthly expenses.

• Remove work-related costs
• Focus on what you actually need to live comfortably

For example:

• Current monthly expense: ₹1,00,000

Now consider inflation, which means prices rise over time.

 

At around 6-7% inflation:

• Expenses can roughly double every 10–12 years

So if retirement is 15 years away, ₹1,00,000 today could become around ₹2.5–₹3 lakh per month.

 

Estimating target

• Convert your monthly expenses into annual expenses
• Multiply it by around 25-30 times

This gives a rough idea of the corpus needed to generate income in retirement.

 

It may look like a large number, but don’t panic. You may already have some savings, like provident fund balances or investments, which reduce the gap. 

 

The goal is to understand what you need to build from here.

 

How to build a mix

If you are starting late, you cannot rely only on “safe” options.

 

A mix is important.

1] Growth bucket to help you catch up

This is where your money grows over time.

• Equity mutual funds
• Market-linked investments

Even if your retirement is closer, some exposure to growth is still necessary. Otherwise, your money will not keep up with all the rising costs due to inflation.

 

2] Debt bucket for stability

This balances risk.

• Debt funds
• Provident fund-type options
• Fixed deposits

This part helps protect savings from sudden market swings.

 

3] Income bucket for later stage

Closer to retirement, you will need a steady cash flow.

• Annuities (fixed monthly income products)
• Other income-focused options

These are more relevant when you actually start using your savings.

 

4] Health care buffer

This is often underestimated.

• Have a strong personal health insurance plan
• Keep a separate buffer for expenses not covered by insurance

Medical costs can rise quickly and affect your retirement savings if not planned for.

 

A practical way to think about it

• Don’t move everything to “safe” options too early
• Keep a mix that allows growth and stability
• Adjust gradually as retirement gets closer

 

How to avoid mistakes near retirement

This is where the real catch-up happens.

 

Increase your savings rate

If you started late, saving a small percentage may not be enough.

• Make sure to increase contributions when your income rises
• If possible, aim for 30-40 per cent of your income

Even small step-ups each year can help close the gap.

 

Review your plan on a regular basis

• Check your progress once a year
• Adjust based on income changes or life events
• Track whether you are moving closer to your target or not

Avoid common mistakes

• Taking very high risks to catch up: This can lead to losses instead of recovery.
• Becoming too conservative: This limits growth.
• Ignoring inflation: Leads to underestimating future needs.
• Withdrawing retirement savings early: This affects long-term stability.
• Carrying loans into retirement: EMIs can put pressure on fixed income later.

 

Action checklist

• Estimate your current and future expenses
• Identify the gap between savings and the target
• Increase your monthly investment amount
• Maintain a mix of growth and stability
• Review your plan every year

The goal is progress, not perfection.

 

FAQs

How much should someone save for retirement at this stage?

If you are starting late, you may need to save a higher portion of your income, often 30-40 per cent or more. The exact amount depends on your timeline and current savings.

 

How should the portfolio change with age or proximity to retirement?

As retirement gets closer, gradually shift towards more stable investments. However, keeping some exposure to growth is still important to manage inflation.

 

When does an annuity or pension product make sense?

These are useful closer to retirement when you need a predictable income. They are usually not the focus in the early catch-up phase.

 

What mistakes derail retirement planning most often?

Starting late, not saving enough, ignoring inflation, and taking extreme risks are some of the most common issues.