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Inflation vs Retirement Planning: Having a retirement corpus for a financially free retirement is important, but equally important is knowing what it should be for you. What is even more significant is to have an idea to reach there, assessing how inflation can impact your retirement goal and what should be a periodic or one-time investment to achieve that target?

If you earn Rs 30,000 to Rs 80,000 monthly, or if your expenses are in that range, how much retirement corpus may you require in your life?

What may be your lump sum, yearly, or monthly systematic investment plan (SIP) investment to achieve that target?

Get answers to these questions in this write-up.

Your current age

Retirement age

Life expectancy

Current expenses 

Do you have some financial goals post retirement? 

Expenses at retirement 

Corpus required 

Pre-retirement investment return

Post-retirement investment return

Inflation rate 

The primary thing is your current expenses and expenses at retirement.

The basic rule is to calculate the inflation-adjusted corpus as per your current expenses, assuming you will maintain the same lifestyle post retirement.

But if you want an upgrade in it, or if you have other financial goals, the amount will increase accordingly. 

To know for how long you require the corpus, you should know when you plan to retire and your life expectancy.

Life expectancy can be gauged by assessing your current health, health history, lifestyle habits, family health history, etc. 

Another factor is how far you are from your retirement. If you have 30 years, you can gather a corpus with a much smaller amount compared to when you have 15 years to gather the same corpus. 

Inflation can't be overlooked.

Assuming that the prices of things will rise, your calculation should be based till the last year of your retirement.

So, if you are 30 years old and expect to live till 80, expenses will be calculated with the inflation impact 50 years down the line.

We will calculate the estimated corpus for individuals earning Rs 30,000-Rs 80,000 a month. We will also calculate the lump sum amount, yearly investment and monthly SIP investment required to reach that target. 

Here are our calculation conditions 

Current expenses – Rs 30,000-Rs 80,000

Current age – 30 years

Retirement age – 60 years

Life expectancy – 80 years

Current retirement corpus – 0

Inflation – 6 per cent

Pre-retirement return – 12 per cent

Post-retirement return – 7 per cent

(Disclaimer: This is not investment advice. Do your own due diligence or consult an expert for financial planning.)

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