Knowledge Center

Personal finance, explained in plain English - no jargon, no fluff. Every guide is dated so you know it's current, and every one ends with a way to ask Laalaji about your own numbers.

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Annuity An annuity converts a lump sum into a guaranteed regular income stream, typically for life - the mechanism NPS uses to turn part of your retirement corpus into ongoing pension payments rather than a one-time payout. Retirement Planning
Commutation of Pension Commutation lets a pensioner convert a portion of their future monthly pension into an immediate lump sum, permanently reducing the monthly pension amount in exchange for cash upfront. Retirement Planning
Corpus vs. Income Approach The corpus approach plans retirement around a target lump-sum number; the income approach plans around a target monthly income figure - the two are mathematically connected, but starting from the one that matches how you actually think about money makes the planning process more intuitive. Retirement Planning
Deferred vs. Immediate Annuity An immediate annuity starts paying out right after purchase; a deferred annuity accumulates for a chosen period first, then begins payouts later - the choice depends on whether you need income now or are planning ahead for a future retirement date. Retirement Planning
Employee Pension Scheme (EPS) EPS is a defined-benefit pension component funded from part of the employer's EPF contribution, currently capped by a ₹15,000 monthly wage ceiling for calculation purposes - distinct from the employee's own EPF savings balance. Retirement Planning
FIRE (Financial Independence, Retire Early) FIRE is a movement built around saving aggressively enough to stop relying on employment income well before traditional retirement age. Retirement Planning
Longevity Risk Longevity risk is the risk of outliving your retirement savings - rising life expectancy means planning for a shorter retirement than you'll actually have is a real, common miscalculation, not a conservative safety margin. Retirement Planning
Post-Retirement Medical Cover Post-retirement medical cover refers to health insurance arrangements specifically for after employment ends - whether a continued employer benefit (uncommon) or an independent policy secured before retirement, since default employer group cover typically stops at retirement. Retirement Planning
Retirement Replacement Ratio Retirement replacement ratio is the percentage of your pre-retirement income your retirement plan is designed to replace each year - a commonly cited target range, but one that should be checked against your own actual expected post-retirement expenses, not assumed. Retirement Planning
Sequence of Returns Risk Sequence of returns risk is the danger of experiencing poor investment returns in the early years of retirement withdrawals specifically - even if long-term average returns are fine, a bad start while you're also withdrawing money can permanently damage how long a corpus lasts. Retirement Planning
Superannuation Superannuation refers to employer-provided retirement benefit schemes beyond mandatory EPF - a voluntary employer contribution toward a pension or retirement fund, more common in some organized-sector companies than others. Retirement Planning