Why is inflation a critical factor in retirement planning?

Inflation reduces the purchasing power of your money over time. A monthly expense of ₹50,000 today could become over ₹2,00,000 in 25 years with 6% inflation. Your retirement plan must account for this to ensure your savings can support your future lifestyle.

What is the difference between pre and post-retirement returns?

Pre-retirement, you can typically take more risks for higher returns (e.g., in equities). Post-retirement, the focus shifts to capital preservation, so investments are usually in safer, lower-return assets like bonds or fixed deposits. This calculator accounts for that shift.

What is a 'safe withdrawal rate'?

A safe withdrawal rate is the percentage of your retirement corpus you can withdraw annually without depleting your principal too quickly. A common rule of thumb is the 4% rule, which this calculator implicitly considers when using your post-retirement return and inflation rates.

Advanced Retirement Planning Calculator

Current Financial Status

Your Current Age

Planned Retirement Age

Current Monthly Expenses

Current Retirement Savings

Current Monthly Investment (SIP)

Expected Life Expectancy

Future Projections (Assumptions)

Annual Salary Growth Rate (%)

Expected Inflation Rate (%)

Pre-Retirement Investment Return (%)

Post-Retirement Investment Return (%)

Your Retirement Outlook

Retirement Corpus Needed

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Projected Corpus You Will Build

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Retirement Shortfall

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How Does This Calculator Work?

This calculator provides a detailed retirement forecast by breaking the problem down into three key steps:

Target Corpus Calculation: It first projects your annual expenses at retirement, accounting for inflation. Then, it calculates the total lump sum (corpus) you'll need on day one of retirement to sustain those inflation-adjusted expenses throughout your post-retirement years, assuming your remaining corpus continues to generate returns.
Projected Corpus Calculation: The calculator projects how much your money will grow. It calculates the future value of your existing savings and adds it to the future value of all your future monthly investments. This calculation is "advanced" because it assumes your monthly investment will increase each year along with your salary.
Gap Analysis: Finally, it compares your target corpus with your projected corpus to identify if you will have a surplus or a shortfall. If there's a shortfall, it suggests the additional monthly investment required to bridge that gap.

Explore More Related Tools

Retirement planning is a big goal. Use these other tools to manage the smaller steps along the way:

SIP Calculator: See how your monthly investments can grow over time with the power of compounding.
Inflation Calculator: Understand how the value of your money changes over the years.
Investment ROI Calculator: Analyze the returns on your different investments.
Public Provident Fund (PPF) Calculator: A key tool for safe, long-term retirement savings.
Lumpsum Investment Calculator: Project the growth of a one-time investment, like a bonus.

Frequently Asked Questions (FAQ)

Why is it important to assume my SIP will increase annually?

As your salary grows, so should your investments. Sticking to the same SIP amount for 30 years means you're investing a smaller percentage of your income over time. By assuming your SIP increases with your salary, this calculator provides a much more realistic projection of your potential savings.

What are realistic return and inflation rates to use?

For long-term planning in India, historical data suggests using an inflation rate of 5-7%. For pre-retirement returns, a diversified equity portfolio might historically yield 10-14%, so 12% is a common assumption. For post-retirement, a safer portfolio of debt and some equity might yield 7-9%.

What if my post-retirement return rate is lower than inflation?

This is a dangerous situation where the purchasing power of your savings is actively decreasing each year. The calculator will indicate a very high (or infinite) corpus requirement. This highlights the critical need to have a post-retirement investment strategy that at least outpaces inflation.