A rough estimate of the retirement corpus you need is 25 to 35 times your annual expenses in the year you retire, after adjusting today's spending for inflation. For a 35-year-old spending ₹50,000 a month who plans to retire at 60, 6% inflation turns that into about ₹2.15 lakh a month — roughly ₹25.8 lakh a year — so the corpus needed is around ₹6.4 crore at 25x and closer to ₹7.7 crore at 30x. The higher multiple is safer for an early or long retirement in India.
Step 1: start with today's expenses
Base the plan on what you spend, not what you earn. List monthly household costs — food, rent or maintenance, utilities, transport, insurance premiums, travel, and an allowance for occasional large expenses. Remove costs that will end before retirement (home-loan EMIs, children's school fees) and add costs that tend to rise in old age, particularly health care. Our Budget calculator helps you build this list.
Step 2: adjust for inflation
Inflation is the biggest driver of the final number. At an assumed 6% a year, prices roughly double every 12 years. So ₹50,000 of monthly spending today becomes:
- about ₹89,500 in 10 years
- about ₹1.6 lakh in 20 years
- about ₹2.15 lakh in 25 years
Health-care costs often rise faster than general inflation, so it is prudent to use a slightly higher rate for that portion. See how your own figure grows with the Inflation calculator.
Step 3: apply a withdrawal rate — and its caveats
The widely quoted 4% rule says you can withdraw 4% of your corpus in the first year of retirement and raise it with inflation each year, with a good chance of the money lasting about 30 years. That is the same as needing 25 times your first-year expenses. The rule came from studies of US market history, so treat it as a reference point, not a promise.
Reasons to be more conservative in India:
- Higher inflation than the markets the rule was based on, which erodes purchasing power faster.
- Longer retirements — retire at 50 or 55 and the money may need to last 35–40 years.
- Health costs that can be large and sudden, especially without adequate insurance.
- Sequence risk — a market fall in the first few years of retirement can permanently shrink the corpus if you keep withdrawing.
Many planners therefore use a 3%–3.5% withdrawal rate (about 29–33x expenses) for Indian retirees, especially early retirees.
Worked example: retiring at 60
Age today 35, monthly expenses ₹50,000, retirement at 60, assumed inflation 6%.
- Monthly expenses at 60: about ₹2.15 lakh (₹25.8 lakh a year)
- Corpus at 25x (4% withdrawal): about ₹6.4 crore
- Corpus at 30x (about 3.3% withdrawal): about ₹7.7 crore
To build ₹6.4 crore in 25 years, a monthly SIP of roughly ₹34,000 would be needed at an assumed 12% annual return, or roughly ₹48,000 at an assumed 10%. These are illustrations — equity returns are not guaranteed and mutual fund investments are subject to market risk. Existing EPF, PPF and NPS balances count towards the target and reduce what you need to invest. A step-up SIP that grows with your salary can make the starting amount much smaller.
Try your own inputs in the Retirement Corpus calculator.
Where the corpus can come from
- EPF — automatic for most salaried employees; see the EPF calculator.
- PPF — tax-free, government-backed, 15-year lock-in.
- NPS — market-linked with tax benefits; at 60, up to 60% can be withdrawn tax-free and the rest buys an annuity. Compare all three on the PPF vs EPF vs NPS page.
- Equity mutual funds — the main growth engine for long horizons, with market risk.
- Senior Citizens Savings Scheme — useful for regular income after 60.
Drawing down in retirement
Retirees commonly split the corpus into buckets: one to three years of expenses in safe, liquid options; a medium-term bucket in debt instruments; and a long-term bucket that can stay in equity to fight inflation. A systematic withdrawal plan (SWP) from mutual funds can provide a monthly income while the rest stays invested. Model withdrawals with the SWP calculator.
Common mistakes
- Planning on today's expenses without inflation.
- Assuming very high returns to make the target look easy.
- Ignoring health insurance — one hospital stay can absorb years of withdrawals.
- Counting the family home as retirement money when you plan to live in it.
- Starting late; every five-year delay sharply raises the monthly amount needed.
Start with your numbers in the Retirement Corpus calculator and revisit the plan every year.