Retirement Planner

Estimating what retirement will really cost

Retirement planning is mostly about one uncomfortable fact: your expenses will keep rising for decades after your salary stops. This planner starts with what you spend each month today, raises it by inflation until your retirement date, and then estimates the corpus needed to cover those expenses until your chosen life expectancy. Finally, it works out how much to invest each month to build that corpus.

The result can look large, and that is normal. Thirty years of inflation can easily triple living costs, and a retirement that lasts twenty-five years needs a substantial pool of money. Rather than being discouraged, use the planner to test realistic changes. Starting five years earlier, increasing your investment each year, or working a little longer can each reduce the monthly requirement considerably.

Be honest with the inputs. Include rent if you will not own a home, and add a buffer for healthcare, which tends to grow faster than other costs in later life. Choose a life expectancy that is longer than you think you need, since running out of money at 85 is a far bigger problem than having some left at 90. Count EPF, PPF, NPS and existing investments in your current savings so the gap is accurate. Revisit the plan every year or two, especially after a pay rise or a major expense, and adjust the monthly amount rather than letting the plan drift. Small corrections made early are far easier than large ones made late. The aim is not a perfect forecast but a plan you can follow and steadily improve.