Retirement Calculator

How the retirement calculator works

Retirement planning comes down to two numbers: how much money you will need on the day you retire, and how much you are on course to have. This calculator works out both, month by month, and shows the gap.

1. Future expenses: today's monthly expenses grow with inflation until you retire. Expenses at retirement = Expenses today × (1 + inflation)^{years to retirement}
2. Corpus needed: the lump sum that, while still invested, can pay those expenses every month until your life expectancy. Withdrawals rise with inflation once a year. Any pension or rent income is taken off first, and anything you want to leave behind is added on.
3. Projected corpus: your current savings, plus your monthly investment rising every year by your step-up, grown at your expected return.
4. Shortfall: if you are short, the calculator shows the extra monthly SIP (with the same yearly step-up), or the one-time amount today, that closes the gap.

The calculation runs month by month. Returns compound monthly, withdrawals are taken at the start of each month and expenses rise once a year.

Why inflation matters so much

At 6% inflation, prices double roughly every 12 years. What costs ₹50,000 a month today will cost:

Your retirement can also last 25 to 30 years, and costs keep rising through all of it. That is why a corpus that looks huge today, like ₹5 crore, may only just be enough.

How much do I need to retire? Quick rules of thumb

• 25 to 33 times your yearly expenses. The "4% rule" from US research says you can withdraw 4% in the first year, rising with inflation, for about 30 years. India has higher inflation, so many planners use 3% to 3.5%, which works out to 28 to 33 times yearly expenses.
• 70–80% of your current spending. Commuting and work costs fall after retirement, but medical costs rise. Plan for health insurance on its own and keep a separate medical fund.
• Real return matters more than return. After you retire, a 7% return with 6% inflation earns only about 1% a year above inflation. That small margin is why the corpus has to be so large.

Early retirement (FIRE)

FIRE stands for Financial Independence, Retire Early: saving and investing heavily so that your investments can pay your living costs well before 60. Your FIRE number is your yearly expenses divided by your safe withdrawal rate:

FIRE number = Yearly expenses ÷ Safe withdrawal rate (e.g. ₹6,00,000 ÷ 3.5% = ₹1.71 crore)

• Lean FIRE: a frugal lifestyle (about 75% of current spending).
• Fat FIRE: a more comfortable lifestyle (about 150% of current spending).
• Coast FIRE: you have saved enough that, with no more investing, growth alone will reach your FIRE number by your target age.

The FIRE number rises with inflation every year, so the calculator compares your growing investments with a growing target.

Where Indians build a retirement corpus

A common approach is to hold more equity while you are young. Move to debt gradually over the last 5 to 10 years before retiring, and keep 2 to 3 years of expenses in safe instruments once retired. Then refill that safe bucket from equity in good years.

Tips to close a retirement gap

• Start early: money invested at 30 has twice as long to compound as money invested at 45.
• Step up your SIP: raise it by 10% each year with your salary. This often closes most of the gap.
• Retire a few years later or work part-time: each extra year adds savings, adds growth, and takes a year off the withdrawals.
• Cut costs and debt before retiring. A paid-off home lowers the expenses your corpus has to cover.
• Buy adequate health insurance so that one hospital bill doesn't empty your retirement fund.

Frequently asked questions