When it comes to retirement planning in India, asking "How much is enough?" is the most important question. Many Indians believe a corpus of ₹1 Crore is sufficient, yet experts warn this amount may barely last a decade due to inflation and rising healthcare costs (1). You need a precisely calculated retirement corpus in India that accounts for rising costs and a longer lifespan.
The goal isn't just to save a large number; it’s to build a corpus, your financial fortress, that generates sufficient, inflation-adjusted income throughout your non-working years. This guide from ABSLI simplifies the process of how to calculate retirement corpus using proven financial formulas.
Step 1: Projecting Your Future Monthly Expenses
The first step is moving from what you spend today to what you will need to spend in your retirement year, adjusted for inflation.
To calculate the monthly expenses after retirement, you must first inflate your current essential expenses by a long-term inflation rate (often assumed at 6% annually) over the number of years left until retirement.
The Formula for Future Value (Inflation Adjustment)
Use the Future Value (FV) formula to project your current expense (PV) forward to your retirement age:
Future Expense = Current Expense * (1 + Inflation Rate) ^ (Years to Retirement)
- Current Monthly Expenses: Identify your current cost of living. For major metro cities like Mumbai, average monthly expenses after retirement could range from ₹30,000 to ₹60,000. Reduce this slightly (e.g., by 10-20%) as some expenses (like commuting or loan EMIs) will cease after retirement.
- Inflation Rate: The RBI targets CPI inflation in the 4% to 6% range (2). Financial experts generally advise using a conservative, long-term assumption of 6% for retirement planning (3).
- Years to Retirement: The number of years you have left to work.
For example, an urban household spending ₹50,000 per month today will need approximately ₹1,60,357 per month in 20 years (assuming 6% inflation), which is calculated as: ₹50,000 * (1.06) ^ 20. To maintain the same standard of living over 30 years, that monthly need increases to approximately ₹2,87,175 (assuming 5% inflation) (3).
Step 2: Determining Your Longevity and Withdrawal Rate
You must plan for your money to last longer than you might initially assume, anticipating the longevity risk associated with improved healthcare in India.
Due to rising life expectancy, you should plan for your retirement corpus in India to last at least 25 to 35 years after retirement (1), a period often calculated up to age 85 or 90.
- The 90-Year Rule: Financial experts recommend planning your corpus to last until at least age 90 or 95 to mitigate the risk of outliving your savings (1). If you retire at 60, this means planning for 30 to 35 years of retirement.
- The 4% Withdrawal Rule (1): This is a key principle for how to calculate retirement corpus. This conservative rule suggests that you can safely withdraw 4% of your total corpus in the first year of retirement, and then adjust that amount for inflation annually, ensuring the corpus lasts for 30 years or more.
- Corpus Requirement: If your projected annual expense at retirement is ₹24 Lakh, your target retirement corpus needs to be calculated as: ₹24 Lakh / 0.04 = ₹6 Crore.
Step 3: Calculating Your Required Monthly SIP
Once you have established the required total retirement corpus, you can determine the systematic monthly savings (SIP) needed to reach that goal.
The final step to how to build retirement corpus is calculating the monthly investment (SIP) required, which depends heavily on the expected return on your investments during your working years.
- Investment Return Assumption: During your accumulation phase (working years), experts advise assuming a return of 10% to 12% on your equity-heavy investment portfolio, balancing ambition with reality (3).
- The Impact of Time: The earlier you start, the smaller your required monthly investment due to the power of compounding. For instance, achieving a ₹1.5 Crore corpus in 15 years might require a SIP of ₹30,000 per month (assuming a 12% return).
Role of Annuity and Guaranteed* Income
As you near retirement, products offering guaranteed$^{#}$ income become vital. ABSLI's Annuity Plans help convert a large, accumulated corpus into a predictable income stream that cannot be outlived, thereby addressing the crucial longevity risk.
- Post-Retirement Investment: When retired, your investment strategy should shift to capital preservation, targeting conservative returns (e.g., 5% to 7%) from debt instruments and annuities (3). A portion of the corpus should be used to buy an annuity to guarantee a lifelong income.
Conclusion
The secret to a successful retirement planning in India is not the size of the initial corpus, but the precision of the calculation. By rigorously applying the steps, inflating your current expenses, planning for a long life, and using the 4% Withdrawal Rule, you can shift your goal from an abstract figure to a measurable target. Start today by using a retirement calculator to determine your precise monthly investment requirement for your target retirement corpus in India.
Sources
(1) Corpus Longevity, 4% Rule, and Longevity Risk (Age 90-95), The Economic Times:
(2) RBI Inflation Targeting Framework (4% +/- 2% band), Reserve Bank of India (RBI):
(3) SIP/Accumulation Return Assumptions (10-15%) and Post-Retirement Returns (5-7%), NISM:
November 24, 2025
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