Simple Retirement Planner

The calculator answers two questions separately and then compares them, which is why it can tell you not just how much you need but whether what you have will actually survive.

The first question is what corpus you need on the day you retire. Your current monthly expense is inflated forward to your retirement year, because that is what your first year of retirement will actually cost. Someone spending ₹1 lakh a month today at 6% inflation will need ₹1.06 lakh a month in their first retired year if retirement is a year away, and considerably more if it is twenty.

That first-year expense is then discounted across your retirement using a real return rather than a nominal one. Real return is what your money earns after inflation has eaten into it, calculated as (1 + post-tax return) divided by (1 + inflation), minus one. This is the number that matters in retirement, and it is much smaller than the headline figure — an 11% return taxed at 12.5% and set against 6% inflation leaves a real return of roughly 3.4%. Any calculator quoting you a corpus based on the nominal rate is understating what you need, often by a wide margin.

Withdrawals are treated as arriving at the start of each year, since you spend during the year rather than after it. The first one is at the start of your retirement age and the last in the year you reach your life expectancy, so retiring at 60 and planning to 85 funds 26 years, not 25.

The second question is what you will actually have. Your existing corpus compounds at your pre-retirement return, and your SIP contributions accumulate alongside it. The gap between the two figures is the number the dashboard leads with.

What separates this from a single-formula calculator is the year-by-year simulation that follows. Each retired year withdraws that year's inflated expense first, then earns a post-tax return on whatever remains. This is the correct order — you cannot earn returns on money you have already spent — and it lets you watch the balance rise, plateau and eventually fall. If the corpus is exactly adequate, the final year lands near zero. If it is not, you see the age at which the money runs out rather than simply a shortfall figure.

Recommended SIP solves for the monthly contribution that closes the gap at your pre-retirement return, assuming the SIP runs from this year through the year before you retire; the gap is first discounted back to the end of that window. The dashboard also states the gap in today's money, as the lump sum you would need to invest now.