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When is the Best Age for Retirement in India?
Retirement is an important situation that must be taken seriously from an early age. To determine the best retirement age, consider your financial situation, health, lifestyle, family commitments, and other important aspects.
Moreover, factors such as your expected lifespan, social security benefits, pension plans, and other income sources need to be considered while making this decision. By understanding these aspects, you can make a proper decision about the best retirement age suitable for you.
Early Retirement Age: 60 to 65 Years
Early retirement is when you plan to disassociate yourself from the complexities of work pressure before the prescribed retirement age set by your workplace.
It is usually planned for achieving specific goals, medical issues, or due to someone's unwillingness to work further. For example, retirement in your early 60s can be considered early retirement, as you are fit to work more years even then. Moreover, the age between 60 to 65 is also the average age for retirement in India, as most people choose to retire during this time.
However, before choosing your ideal retirement age, it is also important to consider the advantages and disadvantages it can cause in your lifestyle and financial goals.
Advantages of Retiring Early
1. Invest in a New Career/Business
You may have wanted to start your own business but could not due to a lack of funds. Therefore, after saving sufficiently and planning for early retirement, you can do so and live a healthy lifestyle through the profits earned even in your old age.2. Good for Health
During your work life, it is natural to get stressed out, considering the workload and deadlines. You might have a late night shift or a very early morning shift, which can again disturb your sleep cycle, causing various health hazards. Therefore, if you plan to retire early, you can enjoy good health and stress-free life during old age.3. Opportunity to Travel Freely
Everyone likes to travel as it sets you free from your daily routine and helps you gather energy for work after you return. However, travelling whenever you want to is not possible during work life. Therefore, if you plan to retire early, you will get an opportunity to travel whenever you want to.Disadvantages of Retiring Early
1. Difficulty in Maintaining a Lifestyle
Retirement means your work life ends, after which there is no monthly income. After retirement, you will have to survive on your savings or pre-planned retirement schemes, whose income might not be the same as your last salary. This will result in difficulty in maintaining a lifestyle during your old age.2. Saving Needs to Last Longer
As you retire early, there will be a long time between your retirement age and the average life expectancy. Therefore, you will have to accumulate significant funds to survive this period with a healthy lifestyle. If you do not save much, you will not only face a financial crisis, but your lifestyle will also degrade.3. Possibility of Declining Mental Health
As you retire early, there are high chances of facing a financial crisis as your savings have to last longer than usual. The thought of finishing your accumulated funds might create stress. Being under constant stress can decline your mental health, which will later affect your physical health.Late Retirement Age: 65 to 70 Years
Late retirement is when you work for extra years, even after crossing your ideal retirement age set by the respective company.
As you already know, the average retirement age in India is 60 to 65 years, and any retirement after these years would be considered late retirement. Hence, retirement in someone's early 70s or working even after retirement period is considered late retirement age.
There are plenty of reasons why an individual might choose late retirement, including financial insecurity, no medical corpus, being debt-ridden, etc. Other than this, some people choose late retirement due to their love for work or to get rid of boredom. However, before considering late retirement, understand the advantages and disadvantages it can cause in your lifestyle and financial goals.
Advantages of Retiring Late
1. More Time to Save Money
When retiring late, you work for a few extra years, earning a bit more than usual that provides you with a better lifestyle in the future. Besides, having extra funds for your retirement will help you cope with unexpected emergencies or situations. This situation may be related to health, children's education or marriage, home renovation, etc.2. Save a Lot on Taxes
Senior citizens till the age of 80 years have to pay zero tax on their annual income of ₹3 Lakhs. Regular citizens above 60 need to pay zero tax only up to an annual income of ₹2.5 Lakhs. Hence, if you are working even after your normal retirement age, you can save a lot on taxes.
3. Better Lifestyle
As you continue to work even after your normal retirement age and make a constant earning, you can maintain a better lifestyle. This is because, with time, you earn more and therefore accumulate more funds to live a comfortable life in your old age. In addition, you can lead a stress-free life as there will be a constant inflow of funds to save you during any emergencies.
Disadvantages of Retiring Late
1. Less Time to Enjoy Retirement
Although there is a huge scope of accumulating a lot of funds if you pursue late retirement, you will not get much time to enjoy this period. The average life expectancy in India is 70 to 71 years (approximately). Now, if you decide to work till this late to save a lot more, then neither will you be able to enjoy retirement nor your accumulated savings.2. No Time to Pursue Dreams
People can have dreams of pursuing something on the grounds of a career which they would like to fulfil after retirement. This dream can be starting a business, being a consultant, etc. However, if you choose to pursue late retirement, you cannot give time or focus to any of your other dreams due to old age.3. No Time to Travel Freely
While working, it is impossible to always get leave and go on a trip, especially for a longer time. Therefore, people usually wish to travel around the world freely after retirement and enjoy this period. Now, if you plan to work for a long time and choose to retire late, there will be no time left to invest in travelling.Ways to Determine the Right Age to Retire
After learning the impact of your age on retirement, it is very important to consider all these consequences you may face as you age. Once you understand these consequences, you can also determine a suitable age to retire.
Therefore, the various things to keep in mind for deciding the right age to retire are as follows:
1. Financial Security
Before retiring, it is important to be financially secure, meaning you should have more assets than liabilities. This is possible only when you have cleared most of your debts. Therefore, before retirement, consider your debts and the day you will make their final payment.2. Family Goals
Some people think a set retirement age will help you fulfil your family goals. This means after working till a certain age, you will be able to spend time with your family and support them mentally. Keeping this in mind, you can choose your suitable retirement age.3. Life Purpose
Before determining your most suitable age to retire, you should first understand your life's purpose, especially after retirement. If you love your job and wish to continue so, then choose late retirement. On the other hand, if you want to travel or spend some quality time with your close ones, you might choose to have an early retirement.
Therefore, the decision of an individual to retire depends majorly on factors like lifestyle goals, financial capability and unfulfilled hobbies. Although the average age to retire is around 60, people nowadays plan for early or late retirement, depending on their financial liabilities and goals. Hence, to choose your best age for retirement, it is important to keep all these factors in mind and choose accordingly.
FAQs About the Best Age for Retirement
Are there any tax benefits for people after retirement?
Which is the ideal age to start planning for your retirement?
Is getting medical insurance a part of retirement planning?
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Disclaimer
- This is an informative article provided on 'as is' basis for awareness purpose only and not intended as a professional advice. The content of the article is derived from various open sources across the Internet. Digit Life Insurance is not promoting or recommending any aspect in the article or its correctness. Please verify the information and your requirement before taking any decisions.
- All the figures reflected in the article are for illustrative purposes. The premium for Coverage that one buys depends on various factors including customer requirements, eligibility, age, demography, insurance provider, product, coverage amount, term and other factors
- Tax Benefits, if applicable depend on the Tax Regime opted by the individual and the applicable tax provision. Please consult your Tax consultant before making any decision.
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