Home Loan or Retirement Corpus?

• Should you buy a house before retirement or not?

• A topic widely debated on social media

The importance of owning a home needs no special mention. However, due to various reasons, many people who start their careers are unable to fulfil the dream of owning a house for a long time. Recently, a debate has gained traction on social media on whether buying a plot or a house before retirement is the right decision, especially for those who do not own any other property. Financial experts advise such individuals to plan housing security well in advance of retirement.

As job uncertainty and layoffs continue to impact India’s private-sector workforce, many salaried professionals are prioritising buying a home in a metro city over building a retirement corpus. At the same time, several voices have stressed that financial security and a stress-free life should take precedence over long-term home loan commitments, triggering an extensive discussion on the subject.

One netizen stated that individuals earning between ₹1.25 lakh and ₹1.30 lakh per month could potentially build a retirement corpus of nearly ₹2 crore. With such savings, they could relocate to a Tier-2 or Tier-3 city, where home ownership becomes optional rather than mandatory. They questioned why one should remain locked into EMIs for 15 to 20 years, warning that people with heavy financial liabilities suffer greater mental and financial stress during layoffs.

Retirement Corpus vs Home Ownership

Many participants felt that financial independence should be the primary goal. One person remarked, “The goal is not to stop working, but to reduce the anxiety that comes from being over-leveraged.” Another shared a personal experience of buying a 2BHK apartment in a Tier-1 city in 2011 after losing a job early in their career during the global financial crisis. “I cleared my home loan by 2022, but after being laid off again, I shifted my focus towards retirement investments,” they said.

They observed that owning a debt-free home at the age of 40 offers stability, but true peace of mind comes only after accumulating a retirement corpus worth 35–40 times one’s annual expenses. As one person put it, “Among roti, kapda aur makaan, acquiring makaan is the hardest.” While renting is practical, frequent relocations can create uncertainty later in life. Therefore, they suggested not completely avoiding home ownership, but being realistic about affordability and avoiding excessive financial burden. Another view was that if someone has sufficient savings to live comfortably without owning a house in a Tier-1 city, relocating later to a Tier-2 or Tier-3 city is a sensible option.

What Do Financial Experts Say?

Financial experts advise individuals who do not have other properties to plan for housing security well before retirement. They point out that nearly 70–80% of retirees own just one primary asset—their home. Even those who do not own a home by retirement usually allocate funds to buy one, whether in a city, a smaller town, or through senior living options. Experts warn that using retirement funds late in life to purchase a house can lead to financial instability. In such cases, they recommend considering Tier-2 or Tier-3 cities where rental housing is more affordable and daily living costs are lower.

They caution against postponing housing decisions until the age of 55 or 58, as shifting homes or downsizing becomes extremely difficult at that stage. Home ownership or housing security, they stress, should be an integral part of long-term financial planning. “People should plan at least 20 years in advance, either through retirement funds or a dedicated housing fund, and avoid withdrawing from it for short-term needs. A home is not merely an emotional decision—it is a financial decision that requires discipline and long-term vision,” experts emphasise.