Retirement Corpus Calculation

Retirement

Retirement corpus is the total wealth needed to fund retirement without running out of money. It must support living expenses for 25-35 years post-retirement (age 60-95), adjusted for 6% annual inflation. The required corpus is typically 25-33x the first year's retirement expenses.

In detail

Retirement corpus calculation steps:n1. Estimate current monthly expenses: Rs 60,000n2. Calculate expenses at retirement (inflation adjusted): Rs 60K x (1.06)^25 = Rs 2.57L/month at 60n3. Annual expense at 60: Rs 2.57L x 12 = Rs 30.9Ln4. Corpus needed (3.5% SWR for India): Rs 30.9L / 0.035 = Rs 8.83 CrnnMonthly SIP needed to build Rs 8.83 Cr:nAt 35, 25 years to go, 12% equity return: Rs 65,000/month SIP needednAt 25, 35 years to go: Rs 18,000/month SIP needednnEarly start saves dramatically: 10-year delay triples the required monthly investment.

Formula

Future expenses = Current expenses x (1 + inflation)^years to retirementnCorpus needed = Annual expenses at retirement / Safe withdrawal ratenMonthly SIP = Corpus x r / [(1+r)^n - 1] / (1+r) where r = monthly rate

Real-life example

🇮🇳 India example

Neha, 30, spends Rs 50K/month. Retirement at 60 (30 years). Future expenses: Rs 50K x (1.06)^30 = Rs 2.87L/month = Rs 34.5L/year. At 3.5% SWR: corpus = Rs 34.5L / 0.035 = Rs 9.86 Cr. Monthly SIP at 12% CAGR for 30 years: Rs 36,000/month. She starts immediately. If she delays 5 years (to 35): needs Rs 72,000/month SIP. Delay cost: Rs 36,000/month more for rest of career.

Frequently asked questions

Is Rs 5 Cr enough for retirement in India? ▼
Depends on expenses and lifestyle. At 3.5% SWR: Rs 5 Cr generates Rs 17.5L/year = Rs 1.46L/month. If your 2024 expenses are Rs 60K/month inflated to retirement at 6% for 25 years = Rs 2.57L/month needed. Rs 5 Cr falls short by Rs 1.1L/month. Reality: Rs 5 Cr was sufficient for retirement in 2000. In 2024-2025 India: Rs 7-12 Cr depending on city and lifestyle.