Things to remember if you’re NRI planning to retire in India.

 While many Indians leave their homeland to make a better living abroad, they usually aim to come back home after retirement. A lot of financial planning goes into ensuring that your retirement years are comfortable. If you’re a Non-Resident Indian aiming to return to India after retiring, here are some things you need to consider.

Set a retirement age

Most people choose to retire by 60, but you can aim to retire earlier if you set some financial goals for yourself and follow through. Your retirement age also depends on your country of residence. Expats in the UAE can work only till they are 65. However, in Saudi Arabia, Oman, and Kuwait the retirement age is 60 years. If you still wish to continue working in some capacity after retirement, you can always choose to work in India. An unspoken rule in retirement planning is that you spend two-thirds of your life working and accumulating wealth for retirement and the third is spent in the drawdown.

There are 4 major factors to consider to set the retirement age.

●         Life expectancy: The average life expectancy of Indians is on the rise. This may mean you might want to work longer, if not, you will have to plan for your retirement accordingly.

●         Exchange Rate: Your existing funds can be easily converted to INR at any point in time. The exchange rate is usually always in Indians’ favor.

●         Expenses: Your retirement lifestyle will define your expenses, however, one also needs to consider newer expenses that will be added with old age. Medical bills and equipment should also be accounted for along with other expenses.

●         Inflation: Inflation rates are always high in India. One needs to consider the real cost of goods in the future while planning retirement.

Have a target nest egg

It’s important to calculate a target retirement corpus in INR. Many factors come into play while arriving at a corpus that you will be comfortable with once you retire. You need to consider whether you want to settle down in a metropolitan city in India after retirement or you’d rather prefer a two-tier city where the cost of living is lower. You also need to figure out a monthly household expense that you would be comfortable with excluding all other expenses like children’s education, any EMIs on loans, and more.

A rule of thumb suggests that one must build a retirement nest at least 25 times the annual expenses at the time of retirement. You need to build a corpus large enough to generate income equivalent to your expenses. Annual inflation also needs to be taken into account while calculating this nest egg.


Get to your target

Now that you know when you want to retire and have also set your retirement corpus, it’s time to get working towards that goal. Many Non-Resident Indians have savings or investments in India. It’s important to take stock of all investments that you already have and then decide whether you need to invest more so that you can reach your financial goals in the stipulated time period.

Invest in the right places

Since you plan on retiring in India, you should focus on investing in Indian financial products. Before returning to India, start liquidating your foreign assets, especially real estate to avoid last-minute sell-offs. You also need to consider liquidating your retirement assets like 401K. However, you need to ensure you’re not violating any lock-in period terms since there might be cost implications. Once you have liquidated your foreign assets, it’s time to systematically invest in equities and assets that best suit your financial needs after retirement.

SBM Bank India offers a range of premium banking services for Non-Resident Indians. They have NRE Accounts (Non-Resident External) for NRIs who send money back to India on a regular basis, NRO Accounts (Non-Resident Ordinary) for those who have a source of income in India from a rented property, investments, or more, and even FCNR Accounts and Deposits (Foreign Currency Non-Resident) to deposit income earned overseas in the currency of NRIs’ country of residence.

Apart from regular banking services, the bank also works with financial experts who give professional advice to help customers achieve their financial goals. From taxation laws for NRIs on mutual fund investments in India to opening Portfolio Investment Scheme (PIS) Accounts which help NRIs invest in stock markets in India and a lot more, SBM Bank India aims at curating world-class banking and wealth solutions to fulfill your goals, but also offers experiences and benefits that you will cherish for life.


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