Retirement Planning
A guide to calculating your retirement corpus and building a worry-free future.
Why is Retirement Planning Crucial?
Retirement planning is the process of setting financial goals for your post-work life and taking action to achieve them. It's about building a large enough corpus (sum of money) that can generate a regular income stream to cover your living expenses when you no longer have a salary.
With increasing life expectancy and rising inflation, starting your retirement planning early is not a luxury—it's a necessity for financial independence and peace of mind in your golden years.
How to Calculate Your Retirement Corpus
It's not just a random number; it's a calculated estimate based on your lifestyle.
Estimate Your Future Monthly Expenses
Start with your current monthly expenses and remove any costs that won't exist in retirement (like children's education fees or a home loan EMI). Then, add any new potential expenses (like increased healthcare costs). This gives you your "current retirement lifestyle cost."
Factor in Inflation
This is the most critical step. You need to calculate the future value of your estimated monthly expenses. For example, if your expenses are ₹50,000 today and you have 30 years to retirement, with 6% average inflation, your expenses at retirement would be almost ₹2.87 lakh per month!
Determine the Total Corpus Needed
Once you have your annual expenses at retirement, you need to calculate the total corpus that can sustain these expenses for your entire retirement period (e.g., 30 years). This calculation should factor in the returns you'll earn on your corpus post-retirement (which should be invested in safer assets).
Calculate the Required Monthly Investment (SIP)
After determining your target corpus, the final step is to calculate how much you need to invest every month from today until your retirement to reach that goal. This will depend on the number of years you have left to invest and the expected rate of return on your investments.
Let Us Do the Math For You
This seems complex, but our Retirement Calculator does all these calculations for you. Just input your details and get an actionable plan.
Common Retirement Investment Vehicles
Equity Mutual Funds (via SIP)
Ideal for long-term accumulation due to their high growth potential. The power of compounding works best over long horizons.
National Pension System (NPS)
A dedicated, low-cost retirement product offering a mix of equity and debt, along with additional tax benefits.
Public Provident Fund (PPF) & EPF
Government-backed, safe investment options that provide tax-free, guaranteed returns, forming the conservative part of your retirement portfolio.