retirement planning for nris: 4 tips every NRI should know about retirement planning

Most of us want to enjoy a similar, if not better, standard of living after retirement. As a Non-Resident Indian (NRI), you have many retirement decisions to make. More than most other people. And you have to do some serious financial planning if you want to make this dream come true.

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Planning for your retirement is more essential for an NRI than for a resident. But with a little forethought, you can make your money work for you!

Let’s take a look at some NRI retirement tips that can help you prepare for your future.

Financial planning for NRIs

Financial planning is more important for NRIs than for most other people. There are a whole host of retirement decisions you need to make long before you retire.

Questions you will need to answer when you start planning for retirement include:

  • You may have moved to your host country in search of a better quality of life. Will your pension contributions allow you to maintain this lifestyle after you retire? Or would you like to return to India for your retirement?
  • How will inflation, the exchange rate and future fluctuations in the value of money impact your pension fund?
  • Most governments encourage saving for retirement with deductions or tax credits. What are the tax implications of saving for retirement as a non-resident?
  • What investments do you have access to as an NRI? Is your investment portfolio sufficiently diversified in terms of risk?

So how do you plan for your retirement as an NRI?

When deciding how much to set aside each month and where to invest your money, consider the following financial decisions that affect retirement:

  • Life expectancy – The average life expectancy of Indians is increasing. Living longer means you will have to plan more carefully so that you can live comfortably for the time you have left. Will your retirement contributions allow you to maintain your lifestyle?
  • Exchange rate – If you have a savings or pension fund in a foreign currency, you can exchange them for INRs. Often the exchange rate is in your favor. You can also sometimes transfer a foreign retirement fund to an INR retirement annuity.
  • Expenses – Although your expenses will differ depending on the lifestyle you choose for retirement, there are some new expenses that you need to consider. As we age, medical bills and equipment increase. Make sure you plan for this.
  • Inflation – A developing economy like India tends to experience higher inflation rates. When planning for retirement, you need to consider the true cost of goods and services going forward.

Retirement Planning Tips for NRIs

Planning for your retirement is all about you. It will depend on where you want to retire, what lifestyle you want and what retirement plan you prefer.

You need to start planning for retirement as early as possible. Where and how you want to retire will influence the amount of money you need in your retirement fund. When you want to retire affects the type of investments you make.

1. Consider where, when and how

The first retirement decision you need to make is to decide in which country you want to retire.

Although you are not currently residing in India, you may wish to retire there. Often people decide to retire in India because the increased purchasing power of money earned outside India means they can enjoy a better retirement lifestyle in India compared to to their host country.

You also need to decide when you are going to retire. This decision influences the investment decisions you need to make in your retirement portfolio. The sooner you start saving for retirement, the greater the impact and benefit of compound interest.

How you retire is up to you. Depending on the lifestyle you desire after retirement, you can save money, retire early, and live simply. However, the most common way to plan for retirement is to put money into a pension fund or retirement annuity each month. You may have a pension fund in your host country which can be transferred to an INR retirement pension. You can also invest in the National Retirement System for NRIs to maximize insurance and tax benefits.

2. Know your retirement goals

Your retirement goals reflect the lifestyle you want to maintain after you retire. Most of us want to enjoy a similar, if not better, standard of living after retirement. To get there, we have to plan for it.

You need to consider the expenses associated with your retirement goals. If you want to travel or embark on a new hobby, plan it. If you want to live near your grandchildren, you need to be able to afford to retire in a neighborhood close to where they live.

3. Find investment options in India

If you don’t have a pension fund in your host country, or just want to diversify your portfolio, consider finding investment options in India. This often allows you to maximize your insurance and tax benefits.

You can consider the following investment options in India:

  • Mutual Funds – As an NRI, you can invest in mutual fund programs and monthly income plans.
  • Stocks – You can invest in direct stocks through an account linked to your non-resident external account (NRE) or your non-resident ordinary account (NRO).
  • Fixed deposits – A fixed deposit linked to your NRE allows you to earn tax-free interest.
  • National pension scheme – If you invest in the national pension scheme as an NRI you get the same tax and insurance benefits as a resident.
  • Real Estate – While you cannot own farmland as an NRI, you can invest in residential and commercial properties.

4. Avoid common mistakes

Don’t start saving for retirement late in life. You need to save and invest at every opportunity. The sooner you start saving for retirement, the longer and harder your money is working for you. Compound interest is the most powerful over a long period.

Estimate your retirement budget as precisely as possible. If you underestimate your retirement expenses, you risk making bad investment decisions early on.

You need to consider investment risk when planning for retirement. A more volatile and higher risk portfolio can generate good growth from the start of your investment program. But as you approach retirement age, you want to protect yourself from risks and invest in retirement funds that will systematically pay you your benefits.

And one last tip – keep your documentation up to date for a hassle-free investment.


There are many options available to you as an NRI to plan for your retirement. Once you’ve decided where, when, and how to retire, you can start planning.

The sooner you start saving for retirement, the better. Careful planning is necessary to ensure that you have a well-balanced investment portfolio. Look for investment options in India to maximize your insurance and tax benefits. It will take a little forethought and planning, but you can make your money work for you!

About Kristina McManus

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