Ramesh Rao, a 60-year-old retired IT professional, resides in Bengaluru with his wife, Meera. Their children, both successful engineers at Apple Inc. in the USA, visit them annually during Diwali, creating a special family reunion filled with joy and celebrations.
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Upon retiring five years ago, Ramesh carefully planned his finances, estimating monthly expenses at ₹50,000 for groceries, utilities, healthcare, and leisure activities. His fixed income comprised his pension, fixed deposit interest, and returns from PPF and mutual fund investments.
Initially, ₹50,000 per month sufficed for his needs as he avoided lifestyle inflation during his working years. However, his post-retirement life brought changes.
As his children’s success at Apple elevated their lifestyle, visits during Diwali included stays at premium hotels, dining at high-end restaurants, and lavish gifts. Proud of their children’s achievements, Ramesh and Meera aimed to match this lifestyle during visits, leading to higher expenses on celebrations, gifts, and amenities.
Gradually, the desire to uphold this elevated lifestyle extended beyond special occasions, affecting their everyday life. Ramesh’s monthly expenses rose from ₹50,000 to ₹85,000, causing strain on his retirement corpus.
To counter this, Ramesh curtailed discretionary spending, reinvested in mutual funds, and ensured adequate healthcare coverage to limit expenses. Balancing lifestyle aspirations with financial constraints became vital for sustaining his retirement plan.
Impact of Medical Inflation on Retirement Planning
Medical inflation, often overlooked in retirement planning, exceeds 10% currently, necessitating caution. Consider the significant rise in medical treatment costs over the past two decades.
Key Healthcare Costs Comparison:
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
