How much retirement corpus do I need? The formula, with a worked example
Short answer. Inflate today's expenses to your retirement year, then find the lump sum that can pay those expenses, rising with inflation, for 25 to 35 years. For a 35-year-old spending ₹50,000 a month, that is about ₹6.3 crore at 60 — roughly 25 times first-year retirement expenses — on the assumptions shown below.
What is the formula for a retirement corpus?
Step 1 — expenses in the first year of retirement.
E = monthly expenses today × 12 × (1 + i)n
Step 2 — the corpus.
Corpus = E × [1 − ((1 + i) ÷ (1 + r))N] ÷ (r − i)
Here i is inflation, n the years until you retire, r the assumed return during retirement and N the years retirement must last. Step 2 is the present value of a growing annuity: withdrawals rise with inflation each year, the first is taken at the end of year one, unspent money keeps earning r, and the corpus reaches zero when the plan ends. (If r equals i, use E × N ÷ (1 + r).)
How much corpus is required for retirement at 60? A worked example
Age 35, retiring at 60, planning until 90. Household expenses of ₹50,000 a month today, ₹10 lakh already saved. Assumed: inflation of 6%, a return of 11% a year before retirement and 7% a year during it.
| Step | Working | Result |
|---|---|---|
| 1. Expenses at 60 | ₹50,000 × 1.0625 = ₹50,000 × 4.2919 | ₹2,14,594 a month (₹25.75 lakh a year) |
| 2. Corpus at 60 | ₹25.75 lakh × [1 − (1.06 ÷ 1.07)30] ÷ 0.01 = ₹25.75 lakh × 24.55 | ₹6.32 crore |
| 3. Existing savings at 60 | ₹10 lakh × 1.1125 = ₹10 lakh × 13.585 | ₹1.36 crore |
| 4. Gap to fill | ₹6.32 crore − ₹1.36 crore | ₹4.96 crore |
| 5. Starting monthly SIP, raised 10% every year | 25 years at an assumed 11% a year | ₹13,275 |
| 6. If you never increased it | A flat SIP for the same 25 years | ₹31,204 |
| 7. SIP in the final year | ₹13,275 × 1.1024 | ₹1,30,753 |
All returns are assumed, not promised. SIPs are paid at the start of each month and raised after every twelfth instalment. The same inputs in our retirement calculator give the same results.
₹6.32 crore looks enormous. In today's rupees it is about ₹1.47 crore; inflation does the rest.
Why plan with a step-up SIP?
Because income grows, and savings can grow with it. A flat ₹31,204 is more than 60% of what this household spends today — hard to find at 35. A start of ₹13,275 is about 27%. Raised 10% every year, it passes the flat figure in year 10 and ends at ₹1,30,753 a month, by when the salary should be far larger too. Starting small is fine only if the step-up actually happens; skip it and the plan falls short. The price is more rupees overall — ₹1.57 crore against ₹93.6 lakh — because later money compounds for less time. If your income grows more slowly, set a lower step-up in the calculator.
Does the 25–30x shortcut work?
The shortcut says keep 25 to 30 times your annual expenses. With inflation at 6%, the formula gives the corpus as this multiple of first-year retirement expenses:
| Years in retirement | Return equals inflation (6%) | Return 1 point higher (7%) | Return 2 points higher (8%) |
|---|---|---|---|
| 25 | 23.6× | 20.9× | 18.7× |
| 30 | 28.3× | 24.5× | 21.5× |
| 35 | 33.0× | 28.0× | 24.0× |
| 40 | 37.7× | 31.3× | 26.3× |
So 25–30x is a fair guide for a 30-year retirement earning little more than inflation. It is too low for anyone stopping work at 45 or 50. And it is a multiple of expenses at retirement, not today's: applied to today's ₹6 lakh a year it gives ₹1.5–1.8 crore, which is right only in today's rupees.
What inflation should I use — and what about healthcare?
Inflation is the most sensitive input. In the example, 5% inflation brings the corpus down to ₹4.39 crore; 7% takes it up to ₹9.13 crore, over 40% more than the base case. Six per cent is a prudent planning figure for India.
Healthcare deserves separate thought: medical costs have tended to rise faster than general prices and take a larger share of spending with age. Use a higher inflation rate for the medical part of your budget, keep health insurance in force into retirement, and hold a medical buffer outside the corpus.
Where do EPF, NPS and PPF fit?
- EPF: 12% of basic pay plus dearness allowance from you, matched by your employer, with part of the employer's share going to the pension scheme. The declared rate for FY 2025-26 is 8.25%.
- NPS: after PFRDA's December 2025 changes, a non-government subscriber leaving at 60 with more than ₹12 lakh may take up to 80% as a lump sum and must buy an annuity with at least 20%; ₹8 lakh or less can be withdrawn in full. Only 60% of the corpus is tax-free so far; the rest of the lump sum, and the annuity income, are taxed at your slab rate.
- PPF: a 15-year account, ₹500 to ₹1.5 lakh a year, 7.1% for July–September 2026 (reset quarterly), interest tax-free, extendable in five-year blocks.
Add their current balances under "already saved". EPF and PPF are fixed-income holdings earning a point or two above the 6% inflation assumed here; NPS can also hold equity.
What are the common mistakes?
- Planning only to 75 or 80. In a couple, one partner often lives past 90.
- Using the same return before and after retirement. A corpus you live on is usually invested more cautiously.
- Counting the home you live in. It pays no bills unless you sell or rent it.
- Starting late. With no savings, the 35-year-old above can start at ₹16,908 a month, rising 10% a year. A 45-year-old with the same expenses needs a smaller corpus — ₹3.53 crore — but must start at ₹43,963.
FAQ
How much retirement corpus do I need for ₹1 lakh a month?
Is it fine to start with a small SIP?
Does the corpus include EPF and NPS?
Sources: Akashvani News — EPF rate, FY 2025-26 and EPFO; PFRDA — exit regulations amendment, 2025; ClearTax — NPS rules; Business Today — small savings rates, July–September 2026. All checked 19 Sep 2026.
Education only. This article does not recommend any product and is not investment advice. Spotted an error? Write to us.
Co-founder, Investments & Research · About