"How much do I need to retire?" is one of the most important questions in personal finance — and most people guess far too low, because they forget one quiet force: inflation. Here's how to think about it, in plain words. This is for learning only, not personalised advice.
Why retirement costs much more than today's expenses
If you spend ₹50,000 a month today, you will not spend ₹50,000 a month in retirement thirty years from now. At 6% inflation, that same lifestyle costs roughly ₹2.9 lakh a month by then — nearly six times as much. The number isn't scary because retirement is expensive; it's just decades of rising prices. Any honest estimate has to start here.
The three questions that decide the number
- How much will you spend? Your current monthly expense, grown by inflation until you retire.
- For how long? Your years in retirement — retire at 60, live to 85, and that's 25 years to fund.
- What will your money earn? A pre-retirement return while you build the pot, and a usually lower, safer return after you retire and start drawing it down.
What a "corpus" actually is
Your retirement corpus is the lump sum you need on the day you retire — big enough that it can pay your inflation-rising expenses every year through retirement, while the untouched part keeps earning. In maths terms it's the present value of a growing stream of expenses. You don't need to do that calculation by hand; the point is the intuition: the corpus has to out-run inflation for decades, which is why it looks large.
From corpus to a monthly SIP
Once you know the corpus, the practical question is: how much to invest every month from now until retirement to build it? That's a reverse SIP calculation — the same compounding that grows a SIP, run backwards to find the monthly amount. A disciplined monthly SIP into diversified equity is how most people realistically build a large corpus.
The single biggest lever: start early
Because of compounding, the years you give the money matter enormously. Starting at 30 instead of 40 can roughly halve the monthly SIP needed for the same corpus, because the early contributions compound for far longer. If there is one takeaway, it is this: the cheapest day to start was years ago; the next cheapest is today.
How to read the numbers sensibly
Every retirement estimate rests on assumptions — inflation, returns, how long you live — and none of them will play out exactly. Treat the output as a planning guide you revisit, not a fixed target. Build in a margin of safety, use a conservative post-retirement return, and re-check it every few years as your life and the markets change.
Want to see your own numbers? Try the retirement calculator — enter your age, expenses and assumptions, and it estimates both the corpus and the monthly SIP. For the engine behind it, see SIP: the simplest way to build wealth.
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