Retirement Planning: In your retirement, even if you want to maintain the same lifestyle that you currently have, your expenses will rise at the rate of inflation. So when you want to calculate your retirement corpus, it is important to factor in inflation. It is equally important to know what types of investments may help you reach there and at what annualised growth.

Other factors to calculate the corpus are years to retirement and post-retirement years, and pre- and post-investment growth rates.

With them, you may calculate the estimated required corpus and lump sum and periodic investment to achieve the target.

But if you are 40 years old with Rs 55,000/month expenses and want to maintain the same lifestyle after retirement at the age of 60 for the next 20 years, what may be your retirement corpus?

How much lump sum, yearly, and monthly investment may you need to achieve that corpus?

Find out in this write-up!

Inflate your yearly expenses

If you are 40 years old with Rs 55,000 monthly expenses, want to retire at 60 years of age, and have a retirement life of 20 years, you may know yearly expenses amid the rising inflation.

We assume the average inflation to be 6 per cent.

Let’s see how much the monthly amount and yearly estimated amounts you may need from 40 to 80 years of age.

In the table, you can see that your estimated monthly and yearly expenses at 60 years of age will be Rs 1,76,392 and Rs 21,16,709, respectively.

While at 80 years of age, the estimated expenses will grow to 5,65,714 and 67,88,574.

Retirement corpus required 

Before we calculate the estimated retirement corpus, we should also know the post-retirement return. 

We are assuming a 7 per cent annualised post-retirement investment return. It will help us calculate the estimated corpus required at 60 years of age, which will be the first year of retirement. 

Since the inflation rate is 6 per cent, the real rate of return for the retirement corpus will be 0.94 per cent.

It means from 60 years to 80 years of age, the invested retirement corpus will grow by an estimated annualised rate of 0.94 per cent.

The estimated corpus required will be Rs 3,87,78,184.

Lump sum investment required to achieve this corpus

Since we have already factored in inflation, we need to know the pre-retirement annualised return to calculate the corpus.

We are taking a 12 per cent pre-retirement return. We will calculate the lump sum, annual, and monthly investment amounts.

The estimated lump sum investment required to achieve the target will be Rs 4,020,009.

Yearly investment required to achieve this corpus

The estimated yearly investment to achieve the corpus goal will be Rs 4,80,530.

Monthly investment required to achieve this corpus

The monthly SIP investment to achieve the retirement goal will be Rs 42,157.

Lump sum, yearly, and monthly investment growth table

(Disclaimer: This is not investment advice. Do your own due diligence or consult an expert for financial planning.)