Retirement Planning: Working Out Your Number
Retirement planning comes down to one question: how much money will you need on the day you stop working, so that it lasts for the rest of your life? This calculator works through that question step by step, using your own assumptions about expenses, inflation and returns.
How much do I need to retire comfortably?
"Comfortable" means keeping your current lifestyle without running out of money. Two widely used shortcuts help you get a first estimate before you use the calculator:
- The 25× rule: multiply your yearly expenses by 25. This comes from the 4% rule: withdrawing about 4% of your savings in the first year of retirement, then adjusting for inflation, has historically lasted around 30 years in many studies.
- The 70–80% rule: many planners suggest aiming for a retirement income of about 70–80% of your pre-retirement income, because some costs (commuting, work clothes, saving for retirement itself) stop.
| Monthly expenses today | Yearly expenses | Target corpus (25×) | 4% gives you each month |
|---|---|---|---|
| 30,000 | 3,60,000 | 90 lakh | 30,000 |
| 50,000 | 6,00,000 | 1.5 crore | 50,000 |
| 1,00,000 | 12,00,000 | 3 crore | 1,00,000 |
These figures are in today's money. Because prices rise every year, the amount you actually need on the day you retire will be higher, which is exactly what the calculator above works out for you.
How much should I save each month for retirement?
Once you know your target, the monthly saving depends on how many years you have and the return you expect. For example, to build 1.5 crore:
- over 25 years at 10% a year, you would need to invest about 11,212 a month;
- over 20 years at 12% a year, about 15,013 a month.
For a target of 3 crore over 25 years at 10%, the figure is about 22,423 a month. Starting early makes the biggest difference. Plan your monthly investment with our SIP calculator.
How the calculation works
- Future expenses. Your current monthly expenses are grown by inflation until your retirement age. Prices rise over decades, so the same lifestyle will cost much more.
- Corpus needed. The calculator works out the lump sum required to pay those expenses every month from retirement until your life expectancy, assuming the remaining money keeps earning a return while you withdraw it, and that expenses keep rising with inflation.
- Existing savings. What you've already saved is grown at your pre-retirement return.
- The gap. If your savings fall short, the calculator shows the monthly investment needed to close the gap by retirement.
Choosing sensible assumptions
- Inflation: use a long-term average for your country. Even small changes have a large effect over 30 years.
- Return before retirement: a long-term, diversified portfolio can usually take more risk while you're working.
- Return after retirement: most people shift towards safer investments later, so this is usually lower.
- Life expectancy: plan on the long side. Running out of money is a bigger risk than leaving some behind.
If the monthly figure looks too high
Don't be discouraged. You can start with a smaller amount and increase it as your income grows, retire a few years later, reduce expected expenses, or combine several approaches. Starting early is the most powerful lever, because compounding has more time to work.
Revisit your plan every year or two, and whenever your income, family or goals change.
Planning further? You may also find our SIP Calculator, SWP Calculator useful, or explore all calculators.
Further reading: Retirement planning (Wikipedia)