How Much Retirement Corpus Do You Really Need and How Can SIPs Help You Reach It?
Retirement is not only about replacing income, but about maintaining dignity, financial independence, and predictable cashflows for 25–30 years after you stop working. Rising inflation, healthcare costs, lifestyle choices, and longevity trends make retirement planning a non-negotiable priority today.
Key Elements That Decide Your Retirement Corpus
- Your current age: Younger investors can rely more on compounding and SIPs; older investors need higher monthly investments.
- Your retirement age: Retiring earlier increases the corpus required significantly.
- Monthly expenses today: This forms the base of future inflation-adjusted calculations.
- Post-retirement lifestyle: Travel, leisure, charity, or minimalism all change the numbers.
- Medical expenses: This is the single biggest source of financial risk in retirement.
- Inheritance goals: Many investors want to leave a meaningful corpus for children or dependents.
Most investors underestimate how fast inflation erodes purchasing power. At a 6% long-term inflation rate, your monthly ₹50,000 lifestyle becomes ₹1,60,000 in 20 years. Therefore, corpus computation must always factor in inflation, medical contingencies, and longevity risk extending up to age 90–95.
Retirement Corpus Through SIPs — Practical Calculator Method
Step 1: Estimate inflation-adjusted monthly expenses at retirement.
Future Monthly Expense = Current Expense × (1 + Inflation)Years to Retirement
Step 2: Convert that expense into a required corpus.
Required Corpus ≈ Future Monthly Expense × 12 × 25 (The “Rule of 25” is used globally for a safe withdrawal rate of 4%.)
Step 3: Use SIP returns to compute monthly investment needed.
Monthly SIP Needed = Retirement Corpus ÷ Future Value of SIP factor (based on 10–12% CAGR)
Example (Balanced Scenario):
- Age: 35
- Retirement age: 60
- Monthly expense today: ₹60,000
- Inflation: 6%
- Expected return via SIP: 12%
Future Monthly Expense ≈ ₹2,56,000 Required Retirement Corpus ≈ ₹2,56,000 × 12 × 25 ≈ ₹7.68 crore
To accumulate ₹7.68 crore in 25 years at 12% CAGR: Required SIP ≈ ₹55,000 per month This is a realistic reference model for average Indian households targeting a comfortable, independent retirement. Pl note that image depicted is not exhaustive.
If you expect higher medical expenses, early retirement, or plan to leave assets for children, your target corpus must be proportionately higher. Conversely, lower lifestyle expectations or working part-time after retirement reduces the required corpus.
Investor Takeaway
Gulshan Khera, CFP®, strongly advises that retirement is a long-horizon goal where a disciplined SIP approach beats all other methods. Start early, increase SIPs annually, and calculate your requirements with real inflation rather than assumptions. Explore more structured guidance at Indian-Share-Tips.com, a SEBI Registered Advisory Services.
Related Queries on Retirement Planning and SIP Investing
- How SIPs help build long-term wealth
- How inflation affects retirement planning
- How to estimate medical costs for retirement
- How early retirement impacts corpus calculations
- How to balance SIPs, EPF, and NPS for retirement
