PocketRetirement Planning Calculator
Plan your financial freedom. Estimate the total corpus needed to sustain your monthly expenses post-retirement, adjusted for inflation.
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Expected returns on equity savings
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Expected returns on safe pensions
Required Retirement Corpus
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Monthly Expense at retirement
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Monthly SIP Needed Today
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Retirement Compounding Logic
Retirement planning is done in three steps:
- Step 1 (Inflation Adjustment): Expenseret = Expensecurrent × (1 + inflation)Years to retirement
- Step 2 (Corpus calculation): Uses the post-retirement real rate of return to calculate present value of retirement annuity: Real Rate = [ (1 + Post Return) / (1 + Inflation) ] - 1.
- Step 3 (Monthly SIP needed today): Solves for monthly SIP contribution to reach corpus u/s pre-retirement return rate.
Worked Example
If you are 30 years old, spend ₹50,000 monthly, planning to retire at 60, expecting to live to 85, assuming 6% inflation, 12% SIP returns, and 8% post-retirement annuity returns:
- Monthly Expenses at retirement: ₹2,87,175
- Required Retirement Corpus: ₹6,28,62,492
- Monthly SIP needed today: ₹18,046
Frequently Asked Questions
Why is inflation critical in retirement planning?
Inflation increases the cost of goods over time. An expense of ₹50,000 today will expand to nearly ₹2.8 Lakh in 30 years at 6% inflation, meaning you need a much larger corpus than you assume.
What is the rule of thumb for retirement corpus?
A common rule of thumb is to aim for a corpus of 20 to 25 times your annual expenses at retirement, which allows for safe yearly withdrawals.
What is the post-retirement real rate of return?
It is the return rate of your pension portfolio after subtracting inflation. If your pension yields 8% but inflation is 6%, your real return is approx 1.88%.
What assets should a retiree hold?
Retirees should focus on safety and regular cash flows, allocating a major portion to bank FDs, Senior Citizen Savings Schemes (SCSS), debt mutual fund SWPs, and annuity schemes.
How does life expectancy affect planning?
A longer life expectancy means your retirement corpus must support you for more years, requiring a larger starting capital to avoid the risk of running out of money.