Retirement Planner
Estimate the corpus you need and the monthly SIP to get there.
Retirement Planner / Corpus Calculator: how much you really need to retire
A retirement corpus calculator answers one deceptively simple question: how big a nest egg do you need on the day you stop working, and how much must you save every month to build it? It works backwards from the lifestyle you want in retirement, adjusts it for decades of inflation, and then converts that future target into a monthly saving figure you can act on today.
This tool is for anyone with a working income and a retirement date in mind: salaried employees relying on EPF and NPS, professionals and business owners with no pension, and anyone in their 30s or 40s who suspects their current SIPs may not be enough. It is especially useful in India, where most people have no employer pension after retirement and must self-fund 20 to 30 years of post-retirement life. Unlike a plain SIP or lumpsum calculator, this one links three moving parts at once: rising expenses, an income-replacing corpus, and the savings needed to reach it.
The formula in words
The calculation runs in three clear stages:
- Step 1 - Inflate your expenses. Take your current annual expenses and grow them to your retirement age using inflation: Future annual expense = Current annual expense x (1 + inflation rate) ^ (years to retirement).
- Step 2 - Find the corpus. Estimate the lump sum that can fund those inflating expenses through retirement using the growing-annuity method: Corpus = Future annual expense x [1 - ((1 + inflation) / (1 + post-retirement return)) ^ (years in retirement)] / (post-retirement return - inflation). The denominator (return minus inflation) is the effective real return that the corpus earns while you draw it down.
- Step 3 - Find the monthly saving. Convert the corpus into a monthly SIP: Monthly saving = Corpus x i / [((1 + i) ^ n) - 1], where i is your monthly expected return (annual return divided by 12) and n is the number of months until retirement.
A fully worked example
Suppose Priya is 30 years old, plans to retire at 60 (30 years to save), and expects to live to 85 (25 years in retirement). Her current monthly expense is Rs. 50,000, i.e. Rs. 6,00,000 a year.
- Step 1: At 6% inflation, her expenses at 60 become 6,00,000 x (1.06)^30 = 6,00,000 x 5.74 = about Rs. 34.5 lakh per year (roughly Rs. 2.87 lakh a month in future rupees).
- Step 2: Assume her corpus earns 8% while inflation stays 6%, so the effective real return is about 2%. The annuity factor is [1 - (1.06 / 1.08)^25] / 0.02, which is about 18.7. The corpus needed is 34.5 lakh x 18.7 = approximately Rs. 6.43 crore.
- Step 3: To build Rs. 6.43 crore in 30 years (360 months) at an expected 11% annual return (monthly rate about 0.917%), the monthly SIP works out to roughly Rs. 22,900 per month.
If Priya already has, say, Rs. 20 lakh invested, its future value is subtracted from the target first, lowering the fresh monthly saving required. Stepping up the SIP each year with her salary would let her start lower and still reach the goal.
Rules, assumptions and edge cases
- Inflation drives everything. A change from 6% to 7% inflation can raise the corpus by 20% or more over 30 years, so treat the inflation input seriously.
- Two different return rates matter. The pre-retirement return (while accumulating, often equity-heavy) is usually higher than the post-retirement return (when capital protection matters more). Do not use one rate for both.
- Longevity risk. Plan for a longer life than you expect. Assuming you live to 85 or 90 protects you from outliving your money.
- Existing assets count. EPF, PPF, NPS, real estate meant for sale, and current mutual fund holdings all reduce the additional corpus you must build.
Tax treatment (FY 2025-26)
Several retirement vehicles remain tax-efficient, but rates are volatile and depend on your chosen tax regime, so confirm current rules before relying on them. EPF and PPF broadly follow the EEE model - contribution, interest and maturity are generally tax-free within limits (EPF interest on employee contributions above Rs. 2.5 lakh a year is taxable). Deductions under Section 80C (up to Rs. 1.5 lakh) and the extra Rs. 50,000 for NPS under Section 80CCD(1B) are available only under the old tax regime; the new regime, now the default, does not allow them, though employer NPS contributions under Section 80CCD(2) stay deductible in both. On NPS maturity, up to 60% withdrawn as a lump sum is tax-free while the annuity you buy with the balance is taxed as income when received. Gains from equity mutual funds held over a year are long-term capital gains, taxed at 12.5% above a Rs. 1.25 lakh annual exemption, so build tax into your post-tax return assumption rather than the headline return.
Common mistakes and tips
- Ignoring inflation on medical costs. Healthcare inflation in India often runs higher than general inflation; keep a separate buffer or health cover.
- Confusing today's rupees with future rupees. Rs. 50,000 a month today may need about Rs. 2.87 lakh a month at 60 - always plan in inflated figures.
- Starting late. Because of compounding, delaying by 10 years can more than double the monthly saving required for the same corpus. Start early and step up your SIP each year.
- Over-relying on EPF alone. For most people EPF covers only a fraction of the target; supplement it with equity SIPs and NPS.
- Treating the result as fixed. Revisit the plan every year and after major life changes so your corpus target stays realistic.
Frequently asked questions
How much retirement corpus do I need in India?
There is no single number; it depends on your future monthly expenses, assumed inflation, expected returns and how long retirement lasts. A common rule of thumb is roughly 20 to 30 times your expected annual expenses at retirement, which for someone spending Rs. 50,000 a month today can run into several crores after 25 to 30 years of inflation. The exact multiple falls as your assumed post-retirement return rises.
What inflation rate should I assume for retirement planning?
A general inflation assumption of 6% to 7% per year is reasonable for India, in line with long-term averages. Since medical and lifestyle costs often rise faster, some people plan a slightly higher rate or keep a separate health buffer. Because rates are volatile, review the assumption every year.
Is EPF enough to retire on?
For most people EPF alone is not sufficient, as it typically replaces only a part of pre-retirement income. It is best treated as one pillar alongside equity mutual fund SIPs, PPF and NPS.
How is the monthly SIP for retirement calculated?
The required corpus is converted into a monthly investment using the SIP future value formula: Monthly saving = Corpus x i / (((1 + i)^n) - 1), where i is the monthly expected return (annual return divided by 12) and n is the number of months until retirement. A higher expected return or a longer horizon lowers the monthly amount needed.
Are retirement investments like PPF and NPS tax-free in FY 2025-26?
PPF and EPF broadly follow the EEE model, so contributions, interest and maturity are generally tax-free within limits. The Section 80C deduction and the extra Rs. 50,000 for NPS under 80CCD(1B) apply only under the old tax regime, not the default new regime. At NPS maturity up to 60% taken as a lump sum is tax-free, but the annuity you buy is taxed as income when received.
What return should I assume before and after retirement?
During accumulation, an equity-heavy portfolio is often assumed to earn around 10% to 12% a year, while after retirement a more conservative 7% to 8% is common because capital protection matters more. Using two different rates gives a more realistic corpus estimate, and you should keep them post-tax.
Does starting late really make a big difference?
Yes, significantly. Because of compounding, delaying your retirement savings by 10 years can more than double the monthly amount you must invest to reach the same corpus, so starting early is the single biggest advantage.