Inflation and Retirement
Background
Inflation is the general rise in prices over time. In retirement you no longer have salary hikes to offset it, so the same expenses cost much more 10–20 years later.
Explanation
India has often seen 5–7% inflation. At 6%, prices double roughly every 12 years. Retirement planning must project your expenses in future rupees, not today’s, and then ensure your investments (especially equity) can grow faster than inflation on average.
Example
If you need ₹60,000 per month today, at 6% inflation that becomes roughly ₹1.2 lakh in 12 years and about ₹2.4 lakh in 24 years. A plan that only uses fixed deposits at 7% before tax will likely fall behind after inflation and tax.
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