Retiring in India

India holds deep emotional and cultural roots for many NRIs, making it a preferred destination for retirement—whether full-time or part of a dual-country lifestyle. With a relatively lower cost of living, access to family, and a familiar environment, retiring in India can be both financially and emotionally rewarding. However, NRIs must plan carefully—taking into account Indian tax laws, real estate holdings, pension schemes, health care access, and cross-border financial management. This guide helps you explore retirement options, optimize your income sources, and create a smooth transition toward a peaceful retirement in India.

Note – Please do consult a financial advisor to choose the path that will be right for you in your circumstances.

Why do you need Retirement Planning?

Increased Life Expectancy:

Advancements in healthcare and awareness about healthy lifestyle choices have increased life expectancy. To achieve this, one needs to plan for retirement with a long-term view, considering inflation, increasing healthcare costs, and other expenses. Individuals must select retirement plans that enable them to enjoy a stress-free retirement and focus on the things that matter the most to them.

Inflation:

Inflation refers to the rate at which the prices of goods and services increase over time, decreasing the purchasing power of money. You must consider the impact of inflation on the cost of living while planning for retirement. If you assume an inflation rate of 5%, the cost of living will double in 14 years. So, if you’re hoping to retire in 20 years, you’d need more than double what you require now to maintain your standard of living. Retirement plans find safe avenues to invest your money and build a corpus that can help you battle the impact of inflation.

Leaving a Legacy:

Retirement planning enables you to leave a legacy for your loved ones. Planning your retirement helps you accumulate wealth that you can use once you retire and pass on to your loved ones. By starting to save early for retirement and investing in retirement plans that offer guaranteed returns, you can build a significant corpus over time. You can also use the accumulated funds to support a charitable cause and help make a difference, leaving a legacy that goes beyond financial wealth.

Maintain your standard of Living:

Crucially, retirement planning enables you to maintain your standard of living once you hang up your work boots. Retirement planning involves identifying your retirement goals, estimating the expenses, and creating a plan to accumulate sufficient savings to meet them. You can use retirement plans to create a retirement corpus that provides monthly payments to help replace your regular income and maintain your standard of living. Since these plans invest your funds, they can help battle the impact of inflation on your finances.

Retirement Goals:

Retirement planning empowers you to translate your vision for retirement into reality. By setting clear financial goals like travelling the world or supporting loved ones, and building a roadmap to achieve them, you gain control over your future financial security.

Such meticulous planning ensures your retirement savings effectively meet your desired lifestyle. Unexpected events like medical emergencies or home repairs can disrupt your financial security. Building an emergency fund specifically for retirement can provide a buffer during these challenging times and can weather unforeseen circumstances without derailing your long-term financial goals. This will allow you to embrace your golden years with peace of mind and financial independence.

Understanding Your NRI Retirement Goals

Ask yourself:

Will you settle permanently in India or split time between India and abroad?
What will be your monthly living expenses in India?
Do you plan to rely on Indian income sources (rent, pension, investments), foreign remittances, or a mix of both?
Are your assets primarily in India or overseas?
What will be your tax residency status upon retirement?

Once your vision is clear, it will go a long way in being able to setup a plan for you.

How Much Do You Need to Retire?

The amount you would need for retirement is very personal depending on your financial needs and wants post retirement. Ideally, you should start investing in a retirement plan early as possible. This will give you enough time to create a retirement corpus for a financially secure future in the long run. Once accumulation is done, the corpus can be used to purchase annuities for monthly income post-retirement. Furthermore, even after being converted to annuities, the retirement corpus can continue to grow. The annuity payouts can either be lifelong or for a certain period of time post-retirement.

Take the following things into consideration while calculating your retirement corpus

Monthly expenses
Existing savings
Systematic investments
Inflation rate

Retirement Income Options for NRIs in India

1. Indian Pension Schemes

Employee Pension Scheme (EPS)
If you’ve worked in India before becoming an NRI, you may be eligible for EPS benefits. These can be claimed after turning 58, subject to conditions.
National Pension System (NPS)
NRIs can invest in NPS under FEMA rules using their NRE/NRO account. At maturity, up to 60% can be withdrawn tax-free; the remaining 40% must be used to purchase an annuity.
Private Pension Plans & Annuities
Offered by LIC, HDFC Life, and other insurers—these provide fixed or inflation-adjusted monthly payouts.

2. Investment-Based Retirement Corpus

NRE/FCNR Fixed Deposits
Offer stable, tax-free income in INR or foreign currency (FCNR). Repatriable and low risk.
NRO Fixed Deposits
Useful for income generated in India. Subject to TDS at 30%, but DTAA benefits may reduce this burden.
Mutual Funds
Debt, equity, or hybrid funds via NRE/NRO accounts (depending on the AMC’s NRI onboarding policy). Capital gains are taxed based on type and holding period.
Direct Equity (Stock Market)
Investment via the Portfolio Investment Scheme (PIS) route. Available only through RBI-registered banks.
Rental Income from Indian Properties
Consistent monthly income, especially from urban assets. Routed through NRO accounts.
Reverse Mortgage
Senior citizens can monetize self-occupied property to receive periodic payments without losing ownership.

3. Foreign Income Remittance

Use NRE accounts to park and repatriate funds tax-free
Convert overseas retirement income to INR for local use
Maintain careful tracking for FEMA and tax compliance

Housing for Retirement in India

Own Property: If you already own a home, ensure clear title, updated documents, and necessary renovations
Buy Property: NRIs can buy residential or commercial property (excluding agricultural land) without RBI approval
Rent a Property: Renting offers flexibility, especially if planning partial-year stays in India

Legal & Estate Planning Essentials

Create an Indian Will covering local assets (separate from any foreign will)
Appoint a trusted Power of Attorney in India to handle tasks in your absence
Use Form 10F, TRC and maintain KYC compliance across banks and investments
Update nominee details across all FDs, insurance policies, mutual funds, and real estate