How it works
Retirement planning has two moving parts that both compound. Your expenses inflate until you retire, so ₹50,000 a month today becomes about ₹2,87,000 a month in thirty years at 6%. And the corpus has to keep earning through retirement while you draw from it — which is why the money lasts far longer than dividing corpus by annual spending suggests.
The important technical detail is the real return. Using nominal minus inflation — 7% − 6% = 1% — is the common shortcut, but the correct figure is (1.07 ÷ 1.06) − 1 = 0.943%. Over a twenty-five year retirement that difference compounds into lakhs, and it always errs in the direction of understating what you need.
Corpus = Annual expense at retirement x ((1 − (1+rr)^−N) ÷ rr) x (1+rr), rr = (1+post return) ÷ (1+inflation) − 1
- Annual expense at retirement is today’s spending grown by inflation until you retire
- N is the number of years the corpus has to last
- rr is the real return during retirement, computed exactly rather than as return minus inflation
- Withdrawals are assumed at the start of each year — you need the first year’s money on day one
- Use today’s expenses, not a guess at future onesEnter what you spend now. The calculator handles the inflating, which is easier to get right than imagining a 2056 grocery bill.
- Plan to at least 85Indian life expectancy at 60 keeps rising. Outliving the corpus is a far worse error than over-saving.
- Use different pre and post returnsA working-years portfolio can be equity-heavy at 11–12%. A retirement portfolio turns conservative, so 7% is the more realistic figure.
- Count everything already earmarkedEPF, NPS, PPF and long-term mutual funds all reduce the monthly requirement, often substantially.
- Redo it every few yearsA promotion, a move or a change in family situation all shift the number. This is a plan to revisit, not a one-time answer.
A worked example
Nikhil is 30 and spends ₹50,000 a month. By 60, at 6% inflation, the same lifestyle costs about ₹2,87,000 a month, or ₹34.5 lakh a year. To fund that from 60 to 85 at a 7% post-retirement return, he needs a corpus of roughly ₹7.7 crore.
He has ₹5,00,000 already, which grows to about ₹1.5 crore by 60 at 12%. To close the remaining gap he needs to invest around ₹20,200 a month starting now. Waiting until 40 to start would push that figure to nearly ₹79,000 a month for the same target.
Common mistakes
- Planning around today’s expenses without inflating them, which understates the corpus by three to five times
- Assuming the same high return during retirement as during the working years
- Planning only to age 75 and running out of money at 80
- Treating EPF alone as a retirement plan; the contribution rate rarely supports pre-retirement spending
- Delaying the start — every five years of delay roughly doubles the monthly requirement
What delay costs (₹50,000 monthly expenses today, retiring at 60)
| Start age | Years to invest | Approximate monthly SIP needed |
|---|---|---|
| 25 | 35 years | ₹12,000 |
| 30 | 30 years | ₹22,000 |
| 35 | 25 years | ₹41,000 |
| 40 | 20 years | ₹78,000 |
| 45 | 15 years | ₹1,55,000 |
Frequently asked questions
It depends on your spending, not on a round number. As a rough guide the corpus is 25–30 times your annual expenses at retirement — and those expenses will be several times today’s figure after decades of inflation. Enter your numbers above for a specific answer.
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How BudgetAnalyzer helps
The input that decides everything here is your current monthly spending, and most people underestimate theirs by 20–30%. BudgetAnalyzer gives you the real figure from your own transactions, and tracks your EPF, NPS and mutual fund holdings so you can see the corpus building against the target.