Is Rs 5 crore enough for your retirement?

By factoring in your current expenses and expected inflation, you can estimate how much you’ll need by the time you retire at 60

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Is Rs5 crore sufficient to sustain your financial needs after retirement? The answer depends largely on your post-retirement lifestyle — something you can estimate based on your current monthly expenses (excluding costs like children’s education or EMIs), the type of investments you choose, inflation rates (both before and after retirement), and how early you begin saving.

A realistic retirement plan starts with understanding these variables. By factoring in your current expenses and expected inflation, you can estimate how much you’ll need by the time you retire at 60. Here we illustrate through a table, how based on the current monthly expenses, your retirement corpus can change. For simplicity, our sample scenarios assume constant returns on investments and inflation rates, to help illustrate what kind of corpus you may need (refer to the table).

Key Tips for Building a Strong Retirement Corpus

• Start early: The sooner you begin investing, the more time your money has to grow through compounding. In the example we have taken, if one starts five year earlier at 30 years, one with current monthly expenses of Rs 1 lakh would need Rs 12,000 less monthly investment now to achieve the required retirement corpus.

• Beat inflation: Choose investment avenues that consistently deliver returns higher than inflation. So, your investment in public provident funds, employee provident fund (EPF) and fixed deposits won’t help you create a good retirement corpus in the long term.

• Stay consistent: A long-term SIP in multi-cap or flexi-cap funds over 15–20 years (the accumulation phase) can typically yield 12–15% annual returns. Yes, they are risky investment bets compared to an EPF or PPF, but you have to take that risk.

• Post-retirement strategy: After retirement, consider placing a portion of your corpus in a Systematic Withdrawal Plan (SWP) linked to a large-cap or balanced equity fund. This ensures a steady income stream while allowing your remaining corpus to continue growing.

• High healthcare cost: One must keep in mind the high healthcare cost that comes with old age.