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Avoid These 7 Critical Retirement Saving Mistakes if You’re a Young Earner


Last Updated on October 15, 2023 by Sumitha

Avoid These 7 Retirement Saving Mistakes

Retirement planning may be the last thing on the minds of young earners, but it’s a financial milestone that shouldn’t be delayed. Starting early is crucial to secure a comfortable retirement. In this article, we’ll explore seven common retirement-saving mistakes that young earners should avoid at all costs.

1. Depending Too Much on EPF:

One of the biggest mistakes young earners make is relying solely on the Employees’ Provident Fund (EPF) for retirement savings. While EPF is a secure investment, its conservative growth rate of around 8% per year may not be sufficient to combat inflation over the long term. Diversifying your retirement portfolio by considering high-yield assets like equities is crucial to achieving substantial returns.

For instance, if you have 30 years to retire and earn a basic salary of Rs 3 lakh annually, your EPF corpus, with an 8% annual interest rate, would only be approximately Rs 70,70,000. Diversifying your investments can significantly boost this figure.

2. Not Transferring EPF When Changing Jobs:

With the Universal Account Number (UAN) introduction, transferring your EPF when changing jobs has become easier. Avoid withdrawing your EPF balance, as this will disrupt the power of compounding. Your EPF contributions represent the debt component of your retirement portfolio and can work in tandem with other investments such as PPF and equity mutual funds.

3. Starting to Save Later:

Delaying retirement savings is a grave mistake. The earlier you start saving, the less capital you’ll need to invest, thanks to the power of compounding. Even small contributions early on can grow into a substantial retirement corpus over time.

4. Not Choosing the Right Asset Class:

Choosing between equity and debt assets significantly impacts your retirement corpus. Equities have historically offered higher inflation-adjusted returns than other asset classes. While it’s advisable to have a mix of assets in your portfolio, allocating more towards equities, particularly through diversified equity funds, when retirement is at least a decade away, is a prudent strategy. As retirement approaches, gradually shift funds from equities to less volatile debt assets to safeguard your capital.

5. Considering 60 as the Universal Retirement Age:

Life expectancy is increasing, and economic pressures make it difficult to retire at 60. Retirement planning should focus on sustaining non-earning years, which can extend for decades. Many individuals opt for consultancy jobs post-retirement to remain financially secure and engaged. A substantial retirement corpus is essential to maintain the desired lifestyle during these years.

6. Not Planning for Early Retirement:

Early retirement is gaining popularity but requires a substantial corpus to sustain without active income. Your retirement savings should be sufficient to generate an inflation-adjusted income stream for a comfortable retirement, even if you decide to retire early.

7. Ignoring Inflation:

One of the gravest mistakes is underestimating the impact of inflation on your retirement expenses. Your current monthly budget may seem reasonable, but without accounting for inflation, it could fall significantly short in the future. Ensure your retirement savings plan considers inflation rates to maintain your purchasing power over the years.


Retirement planning is a critical aspect of financial security, and young earners must avoid these common mistakes to ensure a comfortable and stress-free retirement. Start early, diversify your investments, and account for inflation to build a substantial retirement corpus to support your lifestyle in your golden years. Remember, the sooner you act, the brighter your retirement prospects will be.


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