Retirement Planning: ₹3 Crore, ₹5 Crore or ₹10 Crore? Here’s What You Might Actually Need

For many people, a dream retirement is one where financial worries take a backseat and the golden years can be lived on one’s own terms. But how much money does one really need to retire comfortably without depending on others? The answer, experts suggest, depends on a few key factors—your lifestyle goals, expected living expenses, inflation, and how early you begin investing. Understanding how these elements influence your retirement corpus can help you plan a smoother and more secure future.

Know What Your Future Lifestyle Will Cost
The foundation of retirement planning starts with estimating your future expenses. This begins by analysing your current monthly outgoings and predicting how they might change over the years. For instance, someone currently spending ₹50,000 a month at the age of 30 would likely need a far higher amount by the time they retire at 60, simply due to inflation.

Whether you want to maintain your existing lifestyle or opt for a more luxurious one during retirement, your projected expenses must factor in rising costs across categories like healthcare, housing, travel, and daily living. This helps create a realistic picture of how much income you’ll need in your post-work life.

Retirement Duration and Age: Two Major Variables
Another important factor in estimating your retirement corpus is the number of years you expect to live post-retirement. A person retiring at 60 and planning for a 25-year retirement horizon will require a very different investment strategy than someone retiring at 55 and planning for 30 years.

According to financial planners, it’s essential to consider your current age, your planned retirement age, and a reasonable life expectancy. These numbers help determine both the investment period and how long the money needs to last.

Inflation: The Silent Erosion of Wealth
One of the most underestimated factors in retirement planning is inflation. Even a modest 5% annual inflation rate can double your expenses in roughly 15 years. If your monthly expense is ₹50,000 today, it could cross ₹2 lakh by the time you reach 60.

Experts say it’s crucial to adjust your future expense estimates for inflation. This ensures that your retirement fund retains its value over time and doesn’t fall short just when you need it most.

How Much Should You Withdraw Annually?
Once you reach retirement, you’ll start drawing from your savings. But how much should you withdraw each year to ensure your corpus lasts? A common rule, as noted by financial experts, is the 4% withdrawal rate. This method suggests withdrawing 4% of your retirement corpus annually, which gives your investments a chance to continue growing even as you use them.

This approach helps strike a balance between having enough money to live on and not depleting your savings too soon.

Sample Retirement Plan: Starting Early vs Delaying
Let’s consider a scenario: a 30-year-old with monthly expenses of ₹50,000 wants to retire at 60 and needs funds for 25 years post-retirement. With inflation assumed at 5%, and average investment returns of 12% before retirement and 6% after, experts estimate that this individual would need approximately ₹5.76 crore by the time they retire.

To achieve this, they would need to invest a lump sum of around ₹19.25 lakh today, or opt for a monthly SIP of approximately ₹16,337.

Now, compare this with someone who starts at 35, keeping all other variables the same. They would require a slightly smaller corpus of ₹4.52 crore, but would need to invest a larger lump sum of ₹26.58 lakh or a SIP of ₹23,811.

This illustrates the power of compounding and why starting earlier allows for lower monthly contributions to reach the same goal.

Take Action Early To Build Financial Security
Planning for retirement may seem daunting at first, but breaking it down into simple components—your age, expenses, inflation, and time horizon—can make it manageable. The earlier you begin, the more your money works for you, reducing the pressure to invest large amounts later on.

Experts consistently recommend starting your retirement journey in your 20s or early 30s to make the most of compounding and to enjoy peace of mind during your later years.

Disclaimer: This article is for informational purposes only and does not constitute financial advice. The calculations and scenarios mentioned are estimates based on expert opinions and should not be considered as personalised investment guidance. Please consult a certified financial planner for tailored retirement solutions.