By Dr. K.S. Rao, Author, The Retirement Planning Manifesto
The Most Important Question in Retirement Planning
Every Indian saver — regardless of age, income, or profession — eventually asks:
“How much money do I need to retire comfortably?”
It looks like a simple question.
But the answer is deeply personal, dynamic, and shaped by multiple forces — inflation, longevity, lifestyle, healthcare, and life goals.
In The Retirement Planning Manifesto, I call this the “Retirement Number” — your personalised benchmark that determines financial independence.
Understanding your number is not about guessing.
It is about calculating, contextualising, and planning systematically.
Why Your Retirement Corpus Matters So Much
Your retirement corpus is your income replacement engine.
When your active income stops, your corpus must start working for you — for 20, 25, even 30 years.
A well-designed corpus ensures:
• Monthly cash flow
• Medical security
• Inflation-adjusted lifestyle
• Freedom from dependence
• Peace of mind
An under-estimated corpus leads to the opposite:
• Compromise on lifestyle
• Anxiety about outliving wealth
• Dependence on children
• Forced liquidation of assets
• Financial distress during medical emergencies
Your retirement corpus is the backbone of your future dignity.
The Four Forces That Determine Your Retirement Corpus
Let’s decode the four powerful variables that shape how much you need.
1. Your Monthly Expenses — The Starting Point
Retirement planning starts with a simple metric:
“What does it cost to live your life today?”
Many investors underestimate this.
But your current monthly expenses — stripped of loans, children’s education, and work-related costs — form the base.
Example:
If you spend Rs 60,000 today, this number becomes your foundation.
2. Inflation — The Silent Wealth Destroyer
Inflation is the most underestimated retirement risk.
At 5–6 per cent inflation, your ₹60,000 today becomes:
• Rs 1.2 lakh in 15 years
• Rs 2.4 lakh in 30 years
Your retirement corpus must be capable of financing tomorrow’s lifestyle at tomorrow’s cost, not today’s.
This alone doubles or triples most people’s retirement number.
3. Longevity — The New Reality
People are living longer.
India’s life expectancy has crossed 70.
Many retirees will spend 25–30 years or more without income.
This means your corpus must:
• Last long
• Provide increasing income
• Absorb health shocks
• Beat inflation
Longevity converts small retirement gaps into massive long-term shortfalls.
4. Expected Return — The Realistic Engine
Your expected return during retirement (not pre-retirement) determines:
• How long does your corpus last
• How much income it can safely generate
A realistic retirement portfolio may earn 6–8 per cent (post-tax, blended).
This is far lower than pre-retirement returns.
That’s why many people overestimate return and underestimate corpus.
A Simple Method to Calculate Your Retirement Corpus
There are many complex calculators.
But here is a simple, practical, powerful framework.
The 25x Rule (International)
Your corpus should be 25 times your annual expenses at the time of retirement.
If your future annual expense is Rs 12 lakh,
your corpus should be ~Rs 3 crore.
The India-Adjusted 30x Rule (More Realistic)
Given higher inflation and longer lifespans in India,
30x annual expenses is a safer benchmark.
If your future annual expense is Rs 18 lakh, your corpus should be around Rs 5.4 crore.
This is not a luxury number — it is a sustainability number.
A Realistic Example
Let’s say:
• Your current monthly expenses = Rs 70,000
• Years to retirement = 20
• Inflation = 6 per cent
Your expenses at retirement ≈ Rs 2.25 lakh/month
Annual expenses ≈ Rs 27 lakh
Applying the 30x Rule:
Retirement corpus ≈ Rs 8.1 crore
This is the practical retirement number for a comfortable lifestyle — not extravagant, just inflation-adjusted.
Why Most Indians Underestimate Their Corpus Needs
Three reasons stand out.
1. They calculate on today’s lifestyle
Ignoring inflation creates a misleadingly low number.
2. They assume family support will continue
But modern families are nuclear, mobile, and financially stretched.
3. They ignore post-retirement risks
Like health emergencies, long-term care, longevity, and market volatility.
When you don’t account for these factors, the gap between perceived readiness and actual readiness becomes dangerously wide.
The Emotional Side of the Retirement Number
Your retirement number is not just math.
It is a mirror. It reflects:
• The lifestyle you want
• The security you desire
• The responsibilities you carry
• The freedom you seek
Knowing your number brings clarity.
Acting on it brings confidence.
Reaching it brings dignity.
How to Reach Your Retirement Number
The journey to your retirement corpus hinges on three drivers:
1. Start Early (Time multiplier)
The earlier you start, the less you need to invest later.
2. Stay Consistent (Behaviour multiplier)
SIPs, step-up SIPs, and disciplined rebalancing are the backbone.
3. Allocate Smartly (Return multiplier)
A growth-oriented portfolio (equity-led) in the early years
• A stability-oriented portfolio closer to retirement creates sustainable outcomes.
Your corpus is not built by chance — it is built by choice and consistency.
A Key Insight: Your Corpus Must Not Just Be Big — It Must Be Smart
A large corpus without:
• Asset allocation
• Inflation protection
• Liquidity planning
• Systematic withdrawal planning
…can still fail.
Retirement is not only about creating a corpus.
It is about engineering a lifelong income system.
That is what we will explore in the upcoming articles.
Closing Thought
Your retirement corpus is your life’s most important financial goal.
It is the bridge between:
Working years → Freedom years
Earning income → Self-created income
Responsibility → Independence
The question “How much is enough?”
becomes clearer when you consider your lifestyle, inflation, longevity, and aspirations.
The earlier you know your number — the sooner you can work toward owning your future.
(Disclaimer: Views expressed are the author’s own, and Outlook Money does not necessarily subscribe to them. Outlook Money shall not be responsible for any damage caused to any person/organisation directly or indirectly.)
