Retirement Planning: Corpus & Monthly SIP

Why retirement planning matters (in India)

Government pensions (other than NPS/EPF) don't exist for most Indians. The corpus you build during working years IS your retirement income. Getting the number right early matters — a 5-year delay in starting can require 2-3× higher monthly savings to hit the same target.

The Two-Stage Math

Retirement math has two questions: how much corpus do you need on retirement day, and how much to invest monthly to get there.

Stage 1 — Corpus at Retirement

Your monthly expenses grow with inflation between now and retirement:

• Expenses at retirement = Current Expenses × (1 + inflation)^years-to-retirement

The corpus needs to sustain those (inflation-adjusted) expenses for your full retirement life. We use a real rate of return during retirement — your post-retirement return net of inflation.

Corpus = Monthly Expenses at Retirement × [(1 − (1+r)^−n) / r]

where r is the real monthly return and n is months in retirement.

Stage 2 — Monthly SIP Required

Working backwards from the corpus:

Monthly SIP = Corpus × i / [((1+i)^n − 1) × (1+i)]

where i is monthly pre-retirement return and n is months to retirement.

Worked Example

You're 35, earning, and planning to retire at 60 with a life expectancy of 85:

• Current expenses: ₹50,000/month
• Inflation: 6% annual
• Pre-retirement returns: 12% (equity-heavy)
• Post-retirement returns: 7% (debt-heavy)

Results:

• Expenses at retirement: ~₹2.15 lakh/month (inflation over 25 years)
• Corpus needed at 60: ~₹4.5 crore (sustains 25 more years of retirement)
• Monthly SIP needed today: ~₹23,500

That's the power of compounding — ₹23.5k/month for 25 years builds ₹4.5 Cr. Delay to age 40, and the same goal needs ₹45k/month.

Why the numbers feel large

₹4.5 Cr sounds like a lot — but that's in future rupees, after 25 years of 6% inflation. In today's purchasing power, it's the same as ~₹1.05 Cr buying power today. Corpus math just accounts for the fact that you need to buy future groceries at future prices.

Practical Playbook

1. Start now, not next year — compounding rewards early starts disproportionately
2. Rebalance as you approach retirement — shift from 80% equity / 20% debt (age 35) to 40/60 (age 55)
3. Review every 3 years — inflation / returns / expenses all drift
4. Don't forget health insurance — medical inflation runs 12-15%, separate from general inflation
5. Exit home loan before retiring — debt into retirement is a drain on fixed income

Related

Use our Retirement Calculator to model your scenario. For executing the monthly SIP, see the SIP Calculator.