Retirement Calculator

The number you are aiming for

Retirement planning has one central question: how large does the corpus need to be for its returns to cover your spending indefinitely? The standard approach inverts your annual spending using a safe withdrawal rate:

Corpus = Annual spending / Withdrawal rate

At a 4% withdrawal rate, that means 25 times your annual spending. If you expect to need 12,00,000 a year, the target is 3,00,00,000. At a 3% rate the multiple rises to 33 times; at 5% it falls to 20 times.

Where the 4% rule comes from, and its limits

The figure originates from a 1990s study of US market history which found that a portfolio withdrawing 4% in the first year, adjusted for inflation thereafter, survived 30 years in nearly every historical period tested. It is a useful anchor, but it carries assumptions worth knowing: it was based on US data, a specific stock-bond mix, and a 30-year horizon. Someone retiring at 50 with a 40-year horizon, or investing in a different market, is outside the original study's scope. Many planners now use 3–3.5% for early retirement and treat 4% as an upper bound rather than a default.

A worked example

You want 12,00,000 a year, so at 4% your number is 3,00,00,000. You currently hold 5,00,000 and save 25,000 a month, expecting 10% returns. The calculator shows you reaching the target in roughly 23 years and 3 months.

The chart underneath is the part worth studying. Over 30 years you would contribute about 95,00,000 of your own money, while growth adds roughly 5,08,00,000. Your contributions make up only about 16% of the final balance. This is why the years you spend invested matter more than the amount you invest — and why someone starting at 25 with a modest amount usually ends up ahead of someone starting at 40 with far more.

What this calculator leaves out

• Inflation. Your number is in today's money, but your savings are projected at a nominal return, so the years-until-you-reach-it figure is optimistic. For a like-for-like answer, enter a real (after-inflation) return instead: 10% returns with 6% inflation is about 3.8% real. Alternatively, run your annual spending through the inflation calculator and use the inflated figure.
• Pensions and other income. EPF, NPS, annuities, rental income, or a state pension all reduce the corpus you need to build. Subtract expected annual income from your spending figure before calculating.
• Healthcare. Medical costs typically inflate faster than general prices and rise steeply with age. Health insurance premiums in later life are a substantial line item that many plans understate.
• Sequence of returns. A severe market fall in the first few years of retirement is far more damaging than the same fall later, because you are selling assets at depressed prices to fund living costs. Holding two to three years of expenses in cash or short-term debt at retirement is the usual defence.

Using this sensibly

Treat the output as a direction rather than a destination. The inputs that matter most are your savings rate and your timeline, both of which you control, rather than the return assumption, which you do not. Re-run it annually with your actual balance. If the years-to-target figure is not moving in the right direction, the fix is almost always the monthly contribution rather than a more optimistic return.