To retire at 60 and live to 85 on ₹50,000 a month of today's spending, a 30-year-old needs a corpus of about ₹7.71 crore. With ₹5 lakh already saved, that takes a monthly SIP of about ₹29,495.
What this calculates
Enter your age, when you want to retire and how long to plan for, your monthly spending in today's money, inflation, the returns you expect before and after retirement and what you have saved. This works out the corpus you need on the day you retire and the monthly SIP that builds what your savings will not.
The formula
Spending at retirement
expense at retirement = monthly expense × (1 + inflation)^years to retireCorpus
corpus = Σ 12 × expense × (1 + g)^k ÷ (1 + r)^k, for each year k of retirementMonthly SIP
SIP = shortfall × i ÷ (((1 + i)ⁿ − 1) × (1 + i))g is inflation, r the return after retirement, i the monthly return before it (the yearly return ÷ 12) and n the months until you retire. The shortfall is the corpus less your savings grown at the pre-retirement return. Each year's spending is taken at the start of the year.
Worked example
With nothing saved yet the same plan needs about ₹33,847 a month, so ₹5 lakh today is worth about ₹4,350 a month for 30 years.
When to use it, and the mistakes to avoid
Use it to set a savings target, to see what retiring five years earlier or later changes, or to test how sensitive your plan is to inflation and returns.
The mistakes that cost the most:
- Ignoring inflation. It is the largest part of the corpus.
- Planning to too young an age. A longer life needs a larger corpus.
- Assuming a high return after retirement. The corpus is spent, so safety matters.
- Starting late. Every year of delay raises the SIP sharply.
- Leaving the plan alone. Revisit it every year as prices, income and returns change.
FAQ
How much money do I need to retire?
Enough to pay your spending, rising with inflation, for every year of retirement while the rest earns a return. For ₹50,000 a month today, retiring at 60 and planning to 85 with 6% inflation and a 7% return after retirement, the corpus is about ₹7.71 crore. Your own numbers will differ; enter them to see.
Why is the corpus so large compared with my monthly spending?
Inflation does most of it. ₹50,000 a month today becomes about ₹2.87 lakh a month in 30 years at 6%. The corpus has to fund that, and the higher spending after it, for a retirement that may last 25 years or more.
What life expectancy should I plan for?
Plan to a higher age than the average: 85 to 95 is common. Running out of money at 80 is a much worse outcome than leaving some behind at 90. Each extra year raises the corpus you need.
Which returns should I use?
Use a cautious figure for each. Before retirement an equity-heavy mix may earn 10% or so over decades; after retirement most people move to safer assets, which earn less, so the post-retirement return is usually lower. Try lower numbers to see how sensitive the plan is.
Does this count a pension or other income?
No. It assumes the corpus alone pays for your spending. If you will have a pension, rent or an annuity, subtract that from your monthly expenses first, or treat the result as a safe upper bound.