How to Prepare for Retirement in a World of Increasing Life Expectancy

FIRE centres on smart strategies and informed investments for lasting financial stability

- Rohit Murarka

Financial independence, retire early (FIRE) trend is sweeping social media, with some aiming to retire by 40. This assumes a stable standard of living post-retirement, investments covering all expenses for 40-50 years, and sacrificing the two highest-earning decades (ages 40-60)—a risky move due to rising life expectancy. With rising life expectancy, retirement planning is increasingly becoming important. In 1990, the average Indian lifespan was 59 years, rising to 68 by 2022. The World Economic Forum projects a global average of 81 years by 2100, requiring plans for 30-plus years of retirement. To ensure a comfortable retirement, it is imperative to invest wisely. Informed decisions can secure your financial future, no matter when you retire.

Here's how to build and sustain retirement funds.

Diversifying portfolio

A well-diversified investment portfolio is key to mitigating risks and consistent growth. For instance, allocating 60% to equities, 30% to fixed-income products, and 10% to alternative asset classes can provide a balanced approach.

Equities: Historically, equities have delivered better returns than most other asset classes. The Nifty 100 Total Return Index has delivered an annualized return of 12.61% in the last 10 years as of 28 November, Association of Mutual Funds in India data shows.