In Financial Planning, 80 is a Crucial Number
When we think about numbers in financial planning, most people focus on returns, inflation, or retirement corpus. However, 80 is a number that deserves special attention, especially in the Indian context. Why? It symbolizes two challenges that must be addressed for robust financial planning: longevity and gender-based financial planning.
Challenge 1: Retirement Planning in the Age of Longevity
The average life expectancy in India has been increasing steadily. While in 1990, it was 58.3 years, by 2023, it has climbed to around 70 years. In urban centers, with better access to healthcare, nutrition, and awareness, many Indians are expected to live well beyond 80.
For most of us, this means one thing: retirement planning is no longer just a financial goal—it is the financial goal. Traditionally, retirement was seen as a brief phase, typically beginning around age 60 and lasting a decade or two. But today, if you’re retiring at 60, you could easily be looking at 20–25 years of post-retirement life to finance. This adds enormous pressure on your retirement corpus.
To illustrate, let’s take a simple example. If you retire at 60 with a monthly requirement of ₹50,000 and assume you live another 25 years, with an average inflation of 6%, you’ll need a retirement corpus exceeding ₹3.5 crore. With longer life spans, your retirement expenses increase, and any shortfall in planning can lead to financial dependency.
Actionable Strategy:
Investing in retirement should ideally start early. With the power of compounding, even small monthly contributions made over a long time horizon can accumulate into a sizable nest egg. Equity-based mutual funds, the National Pension System (NPS), and Public Provident Fund (PPF) are some excellent long-term options to consider for retirement-focused investments.
Challenge 2: Women and Financial Planning
The second reason why 80 is critical in financial planning comes from an interesting global statistic: 80% of married women are likely to outlive their husbands. In India, women typically outlive men by 2–3 years. Yet, despite this longevity, most Indian women are often not actively involved in long-term financial decision-making.
The situation becomes complex because women, especially homemakers, are often not primary earners. Even working women may not contribute proportionately to their retirement plans, given career breaks or shorter careers due to caregiving responsibilities. When widowed, many women may find themselves inadequately prepared to manage finances.
This is further complicated by inflation. Healthcare, one of the largest costs in old age, is growing at a rate higher than general inflation. Many women find that what seemed like a sufficient amount early in retirement quickly erodes in value.
Actionable Strategy:
Women need to proactively manage and plan their finances. There is an urgent need for women, especially in the 40–50 age bracket, to start investing more aggressively. Equity exposure, for long-term wealth creation, becomes crucial. Financial independence shouldn’t just be a goal—it needs to be a priority for women of all ages. Ensuring that adequate retirement savings, health insurance, and estate planning measures are in place can give women the financial security they deserve.
Conclusion
Both longevity and gender-based longevity are ticking time bombs that require immediate attention in financial planning. The “80” marker signals that we need to shift from a short-term view to a long-term, sustainable financial approach. Retirement planning must accommodate the growing lifespan, and women need to be more involved in their investment decisions to secure their futures.
By addressing these challenges today, we can ensure that we are financially prepared for a future that could last well beyond 80.
