People often carry a rough retirement figure in their heads – usually a crore or two – and assume it will be enough. In reality, inflation erodes the value of money over time, and a retirement that can last up to 30 years after you stop working demands a much larger corpus.
Take a 40‑year‑old who spends Rs 1 lakh per month today and wants to retire at 60. With a 7 % inflation rate and a corpus that only keeps pace with prices after retirement, he would need about Rs 13.93 crore to live comfortably until age 90. If he expects to live only until 80, the target drops to Rs 9.29 crore. If his monthly spend doubles to Rs 2 lakh, the required corpus jumps to Rs 27.86 crore.
A quick look at the table shows that for a Rs 1 lakh monthly expense, the retirement corpus ranges from Rs 4.64 crore (age 40, live to 80) up to Rs 27.86 crore (age 45, live to 90). The monthly SIP needed to build that corpus at a 12 % annual return ranges from about Rs 53,700 to Rs 8,05,600, depending on age and life expectancy.
The assumptions behind these figures are: a 12 % annual return until retirement, a 7 % inflation rate, and a 0 % real return during retirement. The numbers also assume a life expectancy of 80 or 90 years.
Sandeep Jethwani, co‑founder of Dezerv, explains that today’s Rs 1 lakh may not cover tomorrow’s expenses. He points out that in 2006, a person with a Rs 30,000 monthly expense could retire with a corpus of Rs 1 crore. Today, that same Rs 30,000 expense would require a Rs 6 crore corpus.
To build a Rs 13.93 crore corpus over 20 years at 12 % returns, you would need to invest roughly Rs 1.4 lakh every month. If you start five years later, at age 45, the monthly investment rises to nearly Rs 2 lakh because you have only 15 years to compound. Delaying the start by five years pushes the monthly commitment up by about 40 % at every spending level.
A fixed SIP that never changes is unrealistic. It forces you to invest more than you currently spend, which few can manage from day one. A better approach is a step‑up SIP: start with a smaller, affordable amount and increase it each year as your income grows.
The key takeaway is not to chase an exact number but to start early, step up your investment steadily, and plan for a longer, costlier retirement than you might instinctively think. A disciplined, timely plan can build the daunting corpus without overwhelming your current finances.
Disclaimer: The views expressed here are those of the author and not those of any financial institution. Readers should consult a certified financial planner before making investment decisions.