I started making money after turning 20, but started making real money in 2007. But, as it was a job in private sector, it did not come with a promise of pension. And being in India, the government does not provide any social security that would count in anyway when you will not be working.
So, building up a dividend stock portfolio would be great source of supplemental income. In fact while you are building up portfolio, the stocks would share their income with as dividend , and those will be great source of passive income.
While you pick dividend stocks or great businesses but first you need to set a rough goal, so that you know what is the amount you are shooting for. Here is a table to get idea about how much you would need when you retire, considering the inflation rate is 6%
if you are 36 years old and monthly expenses are 50,000 INR a month, at an inflation rate of 6% the expenses will double every 12 years. Now the table might scare you. With medical science improving and increasing our life expectancy, it might be difficult for some to retire. But, let me tell you, with age, some expenses go down and some expenses like medical expenses might increase. Anyway, this table at least gives you an idea of how your expenses would increase because of the inflation.
But, picking a business that will last longer and continue making money, might be tricky. Especially in India, where corporate governance is always questionable and moreover India is not a capitalist society like the United States of America, so you cannot count on dividends. It might be tricky. Even it is difficult to find a good promoter or management team. You can read, why I think value investing is risky.
But, still, in India, other than dividend income, there are very few other options, read this. You can opt for PPF, but the interest rate is going down, but at least the return will not be taxed. You should opt from gratuity if possible, NPS or national pension scheme could be another great option. And Another option is Atal Pension Yojana, which will pay you 5000 rs every month, which might not be much, but it will probably cover your monthly telephone bill if not more.
Fixed deposit and any other fixed-income options are not lucrative anymore as the interest rates going down and given the situation of the economy, I do not think the government will increase the interest rates. Real estate and gold ould be the other two options. But, if the real estate is not making you any money then it might be a liability. Physical gold could not be a cash-flowing asset either. In fact, to protect the gold, you will need to spend money on vault.
So, good stocks could be great way to grow your wealth. Although I like sovereign gold bond too, which pays 2.25% interest. And I invest in the NPS too, which is like annuity. But, still, I do not think without dividends I will be able to generate enough cash flow during retirement. Debt or fixed income instruments will eventually generate less income, even may be less that inflation rate. Stocks have a better chance to keep up with inflation and as long as you choose companies with a great cash flow, they might continue paying out their cash flow as dividends and as free cash flow grows, the dividend pay out will grow too. Hence, dividend stocks might be good option for retirement portfolio.