The ₹1 Crore Question: How Much Is Enough?
How much you need to retire depends on current expense, retirement age, inflation, life expectancy, and lifestyle. Rules of thumb (25× annual expense, 4% withdrawal) give a starting point, but your number is personal. This guide explains the factors, shows worked examples, and helps you estimate your corpus. Use our Retirement Planner for a detailed projection.
Key Takeaways
- 25× rule: Corpus = 25 × annual expense (at retirement). Covers 30+ years at 4% withdrawal
- 70% rule: Plan for 70% of last salary as monthly need. Adjust for lifestyle
- Inflation: 6% inflation: ₹1L today = ₹3.2L in 20 years. Factor it
- Life expectancy: Plan for 85–90. Corpus must last 25–30 years post-retirement
- Use calculator: Retirement Planner: enter expense, age, return. Get corpus and SIP
Factors That Determine Corpus
- Monthly expense at retirement: Current expense × inflation factor. ₹50K today at 6% for 25 years ≈ ₹2.15L/month.
- Retirement age: Earlier retirement = longer corpus needed. 55 vs 60 = 5 extra years to fund.
- Life expectancy: Plan for 85–90. A 60-year-old may need 25–30 years of income.
- Inflation: 6% is common assumption. Healthcare inflation often higher.
- Return on corpus: 6–8% post-retirement (debt, FDs). Affects how long corpus lasts.
Rule of Thumb: 25× Annual Expense
A widely used rule: corpus = 25 × your annual expense at retirement. This assumes a 4% withdrawal rate—you withdraw 4% of corpus each year, and it lasts ~30 years if returns match inflation. Example: need ₹12L/year (₹1L/month) → corpus = ₹3 crore. Need ₹24L/year → ₹6 crore. Adjust up if you want a buffer or plan for higher healthcare costs.
70% of Last Salary Rule
Another approach: plan for 70% of your last drawn salary as monthly need. If you retire with ₹1 lakh/month salary, plan for ₹70,000/month. The logic: some expenses drop (commute, work clothes), but healthcare and leisure may rise. Adjust: conservative planners use 80–100%; those with paid-off house and low expense use 50–60%.
Worked Example
📊 Current expense ₹60K/month, retire in 25 years, 6% inflation
Impact of Inflation
Inflation is the silent killer. At 6%, ₹1 lakh today equals ₹3.2 lakh in 20 years. Your corpus must grow or be large enough to fund inflated expenses. That's why 25× uses expense at retirement, not today. Use 6% inflation for planning; for healthcare, 8–10% is safer.
How to Build the Corpus
- EPF: Mandatory. Employer match. Typically ₹1–3 crore by 60 for salaried.
- NPS: Voluntary. Market-linked. Extra 80CCD benefit. Good for 20+ year horizon.
- SIP (equity): For long-term growth. 10–12% historical. Start early.
- Combination: EPF + NPS + SIP. Diversify. Use Retirement Planner to project.
Use Our Retirement Planner
Enter current expense, retirement age, expected return, inflation. Get required corpus and monthly SIP. Adjust assumptions and see impact.
Disclaimer
Returns and inflation are assumptions. Past performance doesn't guarantee future results. Consult a financial advisor for your situation.