How to calculate your retirement corpus

The subject of retirement planning draws extreme reactions from folks in India. At one end of the spectrum, there are 22-year-olds just into their first job asking if they can retire at 45, now that they've started an SIP of Rs 5,000. They are clearly underestimating the amount of savings, discipline and planning they will need to build a retirement corpus that can fund a retired life that is likely to last as long as their working life. At the other extreme, there are folks in their 40s or 50s who have received such a scare from the humongous targets thrown up by online retirement calculators that they've given up all hope of ever retiring and are simply praying that an early death will solve their problem! Given India's rising longevity, high inflation rate and lack of any form of social security for retirees, building an adequate retirement corpus is absolutely necessary during your working years. Yet most folks get stuck at the very first step in this exercise - estimating how much they will need for a comfortable retirement. Online retirement calculators can throw up widely divergent sums depending on inbuilt assumptions of long-term inflation rate, longevity, one's pre- and post-retirement lifestyle and the likely returns one can earn post retirement. So, here's our attempt to arrive at an answer to the a

This article was originally published on November 06, 2020.