Ramesh Rao, a 60-year-old retired IT professional, lives in Bengaluru with his wife, Meera. Their children, both highly successful engineers, work at Apple Inc. in the USA. Every year, their children visit them during Diwali, making it a special family reunion filled with joy and celebrations.
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When Ramesh retired five years ago, he had meticulously planned his finances. He estimated his monthly expenses at ₹50,000, including groceries, utilities, healthcare, and leisurely activities. His fixed income came from a combination of his pension, interest from fixed deposits, and returns from his PPF and mutual fund investments.
At that time, ₹50,000 per month seemed more than sufficient to cover his needs. He wasn’t extravagant and had consciously avoided lifestyle inflation during his working years. However, things slowly started to change as his post-retirement life unfolded.
As his children’s careers soared at Apple, their standard of living rose dramatically. When they visited India for Diwali, they would stay at premium hotels, dine at high-end restaurants, and buy luxury gifts for the family. Ramesh and Meera, proud of their children’s achievements, wanted to match this elevated lifestyle during their visits. Instead of their usual simple celebrations, Ramesh found himself upgrading to grander arrangements—renting expensive venues for family gatherings, gifting premium items, and spending more on decorations and food.
While these changes seemed small at first, they gradually became a norm. The expectation of maintaining a higher lifestyle, especially during Diwali and other special occasions, started creeping into their everyday life. They now wanted to make their home more comfortable for their children’s annual visits, including buying new furniture, upgrading to a better car, and installing the latest home gadgets.
Over time, Ramesh noticed that his ₹50,000 monthly expenses had ballooned to ₹85,000. The small, incremental changes—dining out more often, upgrading gadgets, and managing higher medical bills—began to strain his retirement corpus. What was once a well-planned retirement fund now seemed insufficient.
The lifestyle inflation that crept into his life, influenced by his children’s success and rising healthcare costs, meant that Ramesh was now dipping into his savings more than he had anticipated. He had not accounted for how his aspirations, driven by external factors, would alter his financial situation. The grand Diwali celebrations, once a yearly treat, had set a precedent that his retirement budget struggled to sustain.
Realizing the long-term financial impact, Ramesh made adjustments. He started reducing discretionary expenses, such as cutting back on luxury gifts and choosing simpler family gatherings. He also explored new investment avenues to generate additional passive income, such as reinvesting in mutual funds and ensuring his healthcare coverage was adequate to limit out-of-pocket expenses.
While Ramesh enjoyed celebrating with his children, he learned the importance of balancing his lifestyle with his financial limitations. He understood that while it was natural to want to match the lifestyle of his successful children, he had to ensure that his retirement plan remained sustainable over the long term.
Longer life expectancy due to medical advancement:-
Medical inflation is the most underrated factor in retirement planning, currently, medical inflation is more than 10% which makes it very imperative to keep this in mind, let us look at some of the medical treatment costs that have soared up in the last two decades.
Heart Bypass Surgery
- 2004: ₹1.5 lakhs
- 2024: ₹5-6 lakhs
Hip Replacement Surgery
- 2004: ₹80,000 – ₹1 lakh
- 2024: ₹2-3 lakhs
Diabetes Management (Annual Costs)
- 2004: ₹10,000
- 2024: ₹30,000 – ₹50,000
Cancer Treatment (Chemotherapy, per session)
- 2004: ₹10,000 – ₹15,000
- 2024: ₹30,000 – ₹1 lakh
Kidney Dialysis (Per session)
- 2004: ₹1,500 – ₹2,000
- 2024: ₹3,000 – ₹4,000
Health Insurance Premiums (Annual)
- 2004: ₹5,000 – ₹10,000
- 2024: ₹25,000 – ₹50,000
