Retiring with a huge sum of Rs 1 crore may seem like a solid plan today, capable of meeting various financial goals such as buying a house, funding a child's education, or covering wedding expenses. However, it's important to consider whether this amount will still be sufficient if you retire in 10, 20, or 30 years.
Inflation, the gradual increase in prices over time, erodes the value of money. What seems like a large sum today might not be enough to support your needs in the future.
For example, while Rs 1 crore may seem substantial now, its value will decrease over time due to inflation. If a car costs Rs 10 lakh today, it could be much more expensive in 15 years. This difference illustrates how inflation reduces purchasing power.
Assuming an average inflation rate of 6%, the value of Rs 1 crore will shrink significantly over time. After 10 years, it will be worth approximately Rs 55.84 lakh in today's terms. In 20 years, it will decline to around Rs 31.18 lakh, and after 30 years, its value will drop to about Rs 17.41 lakh, according to Financial Express.
This demonstrates the critical need for long-term financial planning. Many people plan their finances based on current purchasing power, but inflation gradually reduces this over time.
Even if an investment offers a 6% return, it only keeps pace with inflation, meaning you're not actually gaining anything. Therefore, it's essential to consider inflation's impact on your retirement savings to ensure financial security in the future.
