“How much do I need to retire?” has no single answer, but it has a clear method. Let us work through one example step by step, using the same maths as our retirement calculator, so you can repeat it with your own numbers. Every figure below is an illustration at stated assumptions, not a promise.
The family
Suresh is 35. His household spends about ₹50,000 a month today on everything except EMIs that will end before retirement. He wants to retire at 60 and plan for income until 85. To keep the first pass simple we will ignore his EPF; we add it back in Step 5.
Step 1: Inflate today’s expenses to retirement day
At 6% inflation, prices roughly quadruple over 25 years. Suresh’s ₹50,000 a month becomes about ₹2.15 lakh a month by the time he turns 60. This is the step most people skip, and it is the reason so many retirement estimates are far too low. A family that plans for “₹50,000 a month” will find, at 60, that it buys what about ₹12,000 buys today.
Step 2: Work out the corpus that pays that income for 25 years
After retirement his money will not sit idle; assume it earns 7% a year in a conservative mix, while his expenses keep rising at 6% a year. The amount he needs at 60 to pay a rising income, starting at ₹2.15 lakh a month and lasting until 85, comes to about ₹5.6 crore.
That number looks enormous, but it is in rupees of 25 years from now. In today’s money it is roughly ₹1.3 crore — about 22 years of today’s expenses, which is a useful sanity check.
Step 3: The monthly SIP to get there
At an assumed 12% a year before retirement, Suresh needs a SIP of about ₹32,800 a month for 25 years. That is a lot for most 35-year-olds. Two levers make it manageable:
- Step it up: if he raises the SIP by 10% every year, he can start with about ₹14,200 a month instead. His SIP grows with his salary rather than starting at a level he cannot afford.
- Count other savings: EPF, PPF and NPS balances reduce the gap. We do that in Step 5.
Step 4: See what waiting costs
If Suresh waits five years and starts at 40, the corpus he needs at 60 does not shrink — his expenses keep rising whether or not he invests. With only 20 years left, the flat SIP needed jumps to about ₹60,800 a month, nearly double. The five lost years are not the first five small years; in effect they are the last five, when the corpus is largest and compounding is strongest.
Step 5: Add back the EPF
Suppose Suresh already has ₹5 lakh in EPF and about ₹6,000 a month goes in from him and his employer together. At an assumed 8% a year, that grows to about ₹89 lakh by 60. The gap to fill with his own SIP falls to about ₹4.7 crore, and the SIP needed falls to about ₹27,600 a month flat, or about ₹11,900 with a 10% yearly step-up. Every existing saving counts — as long as he does not withdraw it when changing jobs.
Step 6: Stress-test the assumptions
Every number above is an assumption. Change them one at a time (without EPF) and watch the result:
| What changes | Corpus needed at 60 | Flat SIP | Step-up SIP (start) |
|---|---|---|---|
| Base case | ₹5.6 crore | ₹32,800 | ₹14,200 |
| Inflation 7% instead of 6% | ₹7.9 crore | ₹46,400 | ₹20,100 |
| Return before retirement 10% instead of 12% | ₹5.6 crore | ₹45,000 | ₹18,000 |
| Plan to age 90 instead of 85 | ₹6.6 crore | ₹38,500 | ₹16,700 |
| Return after retirement 8% instead of 7% | ₹5.0 crore | ₹29,400 | ₹12,700 |
One percentage point of inflation moves the answer more than anything else. A plan that still works with slightly worse assumptions is a plan with a margin of safety. As an engineer would say: design for the load you might get, not the load you hope for.
Step 7: Plan the withdrawal phase too
Reaching the corpus is half the job. Drawing an income from it without running out is the other half. The three-bucket SWP method keeps a few years of income in safe funds, so you never have to sell equity in a bad year.
Frequently asked questions
Is 6% the right inflation figure?
It is a reasonable long-run average for general expenses in India, but medical costs usually rise faster. Many planners use 6–7% for retirement and keep a separate health fund.
Should I count the house I live in?
No. A home you live in does not pay your bills. Count it only if you plan to sell or rent it out.
What if I cannot afford the SIP?
Start with what you can, use a yearly step-up, and revisit the plan every year. Retiring a few years later or trimming planned expenses also closes the gap.
These figures are illustrations based on assumed returns and inflation, not guarantees. Share your age and expenses with us and we will build your own retirement plan, including EPF and other savings.
Figures above are illustrations based on assumed rates of return and are not a promise or guarantee of future returns. Mutual fund investments are subject to market risks, read all scheme related documents carefully. WishWiseWealth is an AMFI-registered Mutual Fund Distributor (ARN-188221).