ReckonBoxHow the retirement corpus calculator works
A retirement corpus is the lump sum you need on your retirement day to fund your living expenses for the rest of your life, after inflation has raised those expenses and while the corpus keeps earning a return. This calculator sizes that number, then works backward to the monthly SIP that builds it. It runs three steps, and it shows every one.
Step one inflates your spending. Your Rs 50,000 a month today is not Rs 50,000 at 60: at 6 percent inflation over 30 years it becomes about Rs 2.87 lakh a month, or Rs 34.5 lakh a year. Step two turns that rising expense into a corpus that lasts through your retirement years. Step three divides the corpus by the growth of a monthly investment to find the SIP. On the default numbers, a 30-year-old retiring at 60 and planning to age 85 needs a corpus of about Rs 7.71 crore, reachable with roughly Rs 21,900 a month at a 12 percent return.
The corpus formula, done right
The corpus is the present value of a growing annuity: your inflated annual expense, rising each year with inflation, discounted at the return the corpus earns after retirement, over the number of retirement years. In symbols, Corpus = E x (1 - x^T) / (1 - x), where E is the first-year expense at retirement, T is the retirement years, and x = (1 + inflation) / (1 + post-retirement return).
Most calculators skip this and use a perpetuity, annual expense divided by (return minus inflation), which quietly assumes the money must last forever and ignores how long you actually expect to live. That overstates the corpus. The growing-annuity version uses the precise real rate, (1 + return) / (1 + inflation) - 1, and lets the balance run down to near zero by your life expectancy, which is what a corpus is supposed to do. There is a neat check hidden in it: when the post-retirement return equals inflation, the formula collapses to expense times the number of retirement years, because the corpus earns exactly what prices rise.
A worked example, start to finish
Take the defaults and follow the money. A 30-year-old spends Rs 50,000 a month, or Rs 6 lakh a year, and wants that lifestyle from 60 to 85.
| Step | Value |
|---|---|
| Current annual expense | Rs 6,00,000 |
| Inflated to age 60 (6% for 30 years) | Rs 34,46,096 a year |
| Monthly expense at retirement | Rs 2,87,175 |
| Corpus required | Rs 7,71,48,478 |
| Monthly SIP for 30 years at 12% | Rs 21,856 |
The drawdown table on the tool shows something people rarely expect. Because the Rs 7.71 crore keeps earning 7 percent, it does not fall from day one. It grows for the first decade or so, peaking above Rs 8.3 crore around age 72, then the rising withdrawals overtake the returns and it drains to nearly nothing by 85. That single table is the honest picture of a retirement, and it is missing from every calculator we checked.
The 25x rule versus the real math
The 25x rule says your corpus should be 25 times your annual expenses at retirement, which is the flip side of a 4 percent withdrawal rate. It is a fine back-of-envelope check, and on these numbers it suggests Rs 34.46 lakh times 25, about Rs 8.62 crore. The precise finite-horizon math gives Rs 7.71 crore, a little lower, because it credits the corpus with 25 more years of 7 percent growth that the flat multiple ignores.
Many Indian planners nudge the rule the other way, toward a 3 to 3.5 percent withdrawal, or 30 to 33 times expenses, to leave a bigger safety margin. Which side you lean depends on how much market risk you can hold in retirement, so the rule is a sanity check on the calculator, and the calculator is the detail behind the rule.
Why inflation, especially medical, drives the number
Inflation is the lever that moves this result the most. A single percentage point on the inflation input compounds across decades, so the same expense at 7 percent inflation instead of 6 lands far higher at retirement. General Indian inflation is often planned at 6 percent, but healthcare is the outlier: Axis Max Life cites medical inflation of 13 to 14 percent, and inflationcalculator.in puts it at 8 to 10 percent, well above headline CPI.
Because medical costs land hardest late in retirement, exactly when the corpus is thinnest, testing a higher inflation rate is worth the few seconds it takes. The corpus that looks comfortable at 6 percent can look tight at 8.
What this does not promise
Every number here rests on assumptions you chose, and real returns and inflation will not follow a straight line, so treat the corpus as a target to aim at, not a guarantee. Markets swing, so the pre-retirement return that builds the corpus and the post-retirement return that sustains it are estimates, and a bad early retirement sequence can drain a corpus faster than the smooth table suggests. This is a planning tool and not investment advice, so a SEBI-registered adviser can pressure-test your plan against your real situation. To build the corpus, the SIP calculator projects a monthly investment forward, and to draw an income from it later, the SWP calculator models the withdrawals.
Frequently asked questions
What is a retirement corpus calculator? A retirement corpus calculator estimates the lump sum you need on your retirement day to fund your living expenses for the rest of your life, then the monthly SIP to build it. It inflates your current expenses to retirement, sizes the corpus so it lasts through your life expectancy, and works backward to the investment needed.
How is retirement corpus calculated? First inflate your current annual expense to retirement: expense times (1 plus inflation) raised to the years to retirement. Then size the corpus as the present value of those rising expenses over your retirement years, discounted at the post-retirement return. On Rs 50,000 monthly expenses today, age 30 to 60, living to 85, at 6 percent inflation and 7 percent post-retirement return, the corpus works out to about Rs 7.71 crore.
Why not just use annual expense divided by return minus inflation? That perpetuity formula assumes the money must last forever, so it ignores your life expectancy and inflates the corpus. The correct version is a finite growing annuity over your actual retirement years, which lets the corpus deplete to near zero by your life expectancy and gives a smaller, truer number.
What is the 25x rule for retirement? The 25x rule says your corpus should be 25 times your annual expenses at retirement, the inverse of a 4 percent withdrawal rate. It is a quick proxy, and many Indian planners prefer a more cautious 3 to 3.5 percent withdrawal, meaning 30 to 33 times. On our default numbers the 25x rule suggests about Rs 8.62 crore against the Rs 7.71 crore the precise math gives.
How much should I invest each month for retirement? The monthly SIP is the corpus solved backward through the future-value formula, over the years to retirement at your pre-retirement return. Building a Rs 7.71 crore corpus over 30 years at a 12 percent return needs roughly Rs 21,900 a month, and existing savings cut that figure.
What inflation rate should I assume? General Indian inflation is often planned at 6 percent, but medical inflation runs far higher, commonly cited between 8 and 14 percent. Since health costs rise fastest in retirement, testing the calculator at a higher inflation rate gives a more honest corpus for later years.
How long should my retirement corpus last? Plan for the corpus to last until your life expectancy, which Indian plans often set at 85 to 90 given rising longevity. A longer horizon needs a larger corpus, which is why the life expectancy input directly changes the result here.
Does the calculator account for my existing savings? Yes. Enter what you have already saved and it grows at the pre-retirement return until you retire, then that future value is subtracted from the target, so the monthly SIP only has to build the gap.