'Gen Z taking debt to attend concerts to look cool on Instagram': CA shares a 'big retirement problem' reaching India

India’s middle class is heading toward a retirement crisis—and most won’t realise it until it’s too late, warns CA and wealth advisor Kanan Bahl. His stark warning: your income could run out by age 45, not 60.

"I predict that retirement is going to be a very big problem in India. The DSP Pension Fund projects that the retirement savings gap in India will rise to $96 trillion by 2050. You will start seeing this problem at scale within 10 years. Don't be a victim of this "show-off" pandemic. Live frugally, save aggressively and invest wisely!" said Kanan Bahl.

Check full text here
45 is the new 60. Don't make your retirement plans as if you are going to be employed until 60.

[1] Jobs will increase but ...

I am sure major part of the workforce will adapt to the change and even advancement in technologies have always led to a net increase in jobs. But what if you can't adapt for any reason whatsoever?

Do enjoy your life. But save aggressively and invest wisely as if you are going to have income only until 45.

[2] Are we spending too much?

We're living in much more uncertain times than our parents' generation and are spending way more than them.

Gen Z is taking debt to attend concerts to look cool on instagram. People making ₹25 lakhs p.a. are living paycheck to paycheck.

Don't elevate your lifestyle expenses to such levels where you can barely save for the future.

[3] What to do?

Invest in products like the EPF and NPS through employers which offer tax breaks in the new tax regime, offer tax free compounding and redemption.

They do block your money for a significant time (40% of NPS corpus is only withdraw-able by your nominees after your death) but that ensures discipline and further that you don't splurge that money. Perfect instruments for spendthrifts.

How did people react?
"So true! It’s so easy to get caught up, but long-term financial peace > short-term flex. Really appreciate the reminder to make disciplined choices today so we’re not left struggling tomorrow, Kanan Bahl!" said one user.

"Well put.. On point 3 I recommend that people take help and solve for their goals and not lock up too much for retirement..NPS is locked till 60 and one needs to have enough assets to tide over between 50 and 60, espcially thats when children's education goals etc also come. Also a lot of corporate professionals want to quit at 45 and start a consultancy which means there is need for some capital there as well. NPS and EPF while great from a discipline POV, savers need to ensure there is liquidity as well in their finances," said another user.