The number everyone gets wrong

Ask most Indian investors how much they need to retire, and you'll get a round number pulled from thin air: "₹2 crore" or "₹5 crore". The truth is, the right number depends on three things: your expenses, your years in retirement, and inflation.

Step 1: Start with expenses, not income

Retirement planning starts with what you'll spend, not what you earn. A common mistake is assuming your retirement expenses equal your current salary. They don't.

When you retire:

• The commute goes away
• EMIs (hopefully) end
• Kids' education is done
• Work-related expenses disappear

A reasonable rule: your retirement expenses will be 60-70% of your last drawn salary.

If your last salary is ₹1 lakh/month, expect to need ₹60,000-70,000/month in retirement.

Step 2: Account for inflation

This is the silent killer. Education and healthcare inflation run at 10%+ in India; general inflation at 5-6%.

If you need ₹60,000/month today and you retire in 20 years:

• At 6% inflation: ₹1,92,000/month
• At 7% inflation: ₹2,32,000/month

That's a massive difference over two decades. Always use 6-7% inflation for retirement planning in India.

Step 3: The corpus calculation

The standard approach uses the 25x rule — you need 25 times your annual expenses to retire safely (this assumes a 4% withdrawal rate).

Annual expenses at retirement: ₹2,32,000 × 12 = ₹27,84,000

Corpus needed: ₹27,84,000 × 25 = ₹6.96 crore

Sounds scary. But here's the good news.

Step 4: What it takes to get there

If you're 35 and want to retire at 60 (25 years), and you expect 12% returns from equity mutual funds:

• Monthly SIP needed for ₹7 crore: ₹28,000/month

If you start at 30 instead (30 years):

• Monthly SIP needed: ₹14,000/month

That's half. Starting 5 years earlier literally halves the monthly burden. This is the power of compounding.

Step 5: Don't forget the pension elephant

If you have an EPF/NPS corpus, a house you can rent out, or a pension, your required SIP is smaller. Subtract these from your target corpus before calculating the SIP.

The takeaway

The retirement corpus number isn't pulled from the air — it's a function of your expenses, inflation, and years to retirement. The two variables you control:

1. When you start (earlier = exponentially easier)

2. How much you invest (even ₹2,000/month extra matters over 25 years)

Use the retirement planner on FinvestR to calculate your exact number — it factors in inflation, current corpus, and expected returns.