Over the past few years, a subtle but powerful shift has begun in how Indians think about retirement. No longer is retirement just an “old-age” concept; for many, especially in urban India, it’s a goal that could be reached much earlier — if they plan well. Thanks to growing financial literacy, disciplined investing, and more accessible financial tools, early retirement (often termed FIRE — Financial Independence, Retire Early) is moving from the fringes to the mainstream. But the journey isn’t easy; structural limitations remain. Here’s a look at the some latest trends, and what it all means.
The Rising Power of SIPs and Mutual Funds
One of the clearest signals of growing financial planning is the surge in systematic investment plans (SIPs). As of October 2025, SIP inflows hit a record ₹ 29,529 crore, and the number of active SIP accounts crossed 9.45 crore.
Meanwhile, SIP AUM (Assets Under Management) has crossed ₹ 16.25 lakh crore, accounting for around 20.3% of the mutual fund industry’s total AUM. (source: AMFI data)
Part of this inflow is clearly equity-driven: in Oct 2025, equity mutual funds saw net inflows of ₹ 24, 690 crore. These numbers highlight that many investors are no longer just parking money in safe but low-yield instruments, but are willing to invest in risk assets like equity, likely because they’re thinking long-term.
Retirement Preparedness Is Improving, but Gaps Remain
According to the Axis Max Life IRIS 5.0 (India Retirement Index Study), retirement readiness is improving in urban India. The national IRIS score is 48 (out of 100), up from earlier editions.
Key drivers:
- Financial preparedness is rising: more people now see retirement planning as a priority, and there’s greater awareness of suitable products.
- Health preparedness has also improved: IRIS 5.0 reports health readiness at 46, helped by more preventive health checks and increased health insurance ownership (50% of respondents).
- Emotional preparedness, however, remains a concern: about 71% of respondents say loneliness could be a risk in retirement, and 72% fear dependency on family.
- Importantly: 50% of urban Indians believe they might rely on children or family for their retirement, underscoring that self-funded retirement is not a given.
In another Max Life survey, 57% of people said they believed their retirement corpus might exhaust within 10 years. That’s a stark reminder — many are planning, but not confidently or aggressively enough.
The Macro-Savings Picture: A Double-Edged Sword
At the same time, household savings and credit trends paint a more complex picture. According to CRISIL’s Quickonomics, net household financial savings (i.e., financial savings minus liabilities) have dropped. By FY 2024, net financial savings shrank to ~5.2% of GDP, the lowest in more than a decade, driven by rising liabilities.
CRISIL explains that while households are borrowing more — especially younger people — they’re also gradually shifting their savings toward equities, mutual funds, and small savings. Physical asset savings, like real estate, also remain strong.
This trend makes early retirement planning both more promising and more delicate: investors are building wealth via financial assets, but rising debt could threaten their long-term stability.
What This Means for the FIRE (Financial Independence) Movement in India
- Early-career investing is paying off: The strong SIP numbers show that disciplined investing is spreading widely — not just among HNIs. Compounded over decades, these investments provide real muscle for early retirement goals.
- Retention and consistency matter: It’s not enough to start an SIP; staying invested through market cycles is the key. Given the volatility that comes with equity investing, sequence-of-return risks matter more when you plan to retire early.
- Plan for liabilities and risk: Rising household debt means retirement planning must explicitly factor in liabilities. Planners need to run stress tests for early retirement: what if credit burdens increase, or a health emergency arises?
- Broaden the assumption set: Traditional FIRE models assume no debt and no household support. But in India, many anticipate relying on children or family. That’s a risk — if you want to retire early on your own, build a buffer that accounts for such support.
- Use objective tools and financial guidance: The IRIS study underscores that many are aware of retirement products but not everyone uses them effectively. While more and more are seeing the value of early and long term investing in mutual fund SIPs, many are still to take the plunge. Professional advice, retirement calculators, and disciplined goal-based planning can bridge this gap.
Conclusion: Be Hopeful But Realistic
India is witnessing a structural transformation in retirement thinking. More people are investing systematically, especially via SIPs, and there’s growing awareness of retirement planning beyond just “old age.” The IRIS data shows improved readiness, while macro savings trends hint at growing financial sophistication.
But early retirement in India will remain aspirational for many — not because of lack of tools, but because of real-world constraints like debt, healthcare costs, and family responsibilities. For those who truly want to FIRE, the path is clearer than before, but also demands discipline, realism, and constant adaptation. Sound financial counsel becomes a key ingredient.
Rohin Pagdiwala
Financial Distributor & Founder, Pagdiwala Investments
info@pagdiwalainvestments.com
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