How this calculator works
This calculator uses a two-step, deliberately transparent method — it's a common simplification, not an exact model of your future finances, and the two steps are shown separately so you can see exactly how the final number is built.
Step 1 — inflate today's expense to your retirement year. Your current monthly expenses don't stay flat until you retire; they rise with inflation every year between now and then: Future monthly expense = Current monthly expense × (1 + inflation ÷ 100)(retirement age − current age).
Step 2 — estimate the required corpus using a real-return perpetuity approximation. This treats your retirement corpus as if it needs to sustain your inflated monthly expense indefinitely, growing at a rate equal to the gap between your assumed post-retirement return and inflation: Required corpus = (Future monthly expense × 12) ÷ (post-retirement return ÷ 100 − inflation ÷ 100). This is a commonly used approximation, not an exact calculation for a finite number of years — it doesn't use the "years corpus must last" figure directly, because a true perpetuity by definition never runs out.
If your assumed post-retirement return doesn't exceed your assumed inflation rate, this formula breaks down mathematically — the denominator becomes zero or negative, which would produce a meaningless or negative "required corpus." In that case, this calculator shows a message instead of a number, because a corpus that must be drawn down (not one that can sustain itself indefinitely) needs a different kind of calculation than this simplified method provides.
Why the result can look enormous
With this calculator's defaults — a 30-year run-up to retirement, 6% inflation, and a 7% post-retirement return — the required corpus comes out to several crore rupees. That is not a bug. It's the direct, correct output of dividing a large inflated expense figure by a very thin 1-percentage-point gap between return and inflation. Genuinely: the smaller the gap between your assumed return and your assumed inflation rate, the larger the corpus this method says you need, because a thinner real-return margin means your money grows only slightly faster than prices are rising, and it takes a much bigger base to produce the same real monthly income forever.
Try widening the gap — for example, raising the assumed post-retirement return, or planning for a lower inflation rate — and watch how sharply the required corpus drops. That sensitivity is the single most important thing to understand about this method, more so than any one number it produces.
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Talk to a CA →How is required retirement corpus calculated here?
In two steps. First, today's monthly expense is inflation-adjusted forward to your retirement year: Future monthly expense = Current monthly expense × (1 + inflation ÷ 100)^(retirement age − current age). Second, the required corpus is estimated using a real-return perpetuity approximation: Required corpus = (Future monthly expense × 12) ÷ (post-retirement return ÷ 100 − inflation ÷ 100). This treats your corpus as if it needs to sustain withdrawals indefinitely at a rate equal to the gap between your assumed return and inflation — a commonly used simplification, not an exact finite-year calculation.
Why is the corpus so sensitive to the return-minus-inflation assumption?
Because that gap sits in the denominator of the formula, a small change in it has an outsized effect on the result. Genuinely — if your assumed post-retirement return is only 1 percentage point above inflation, the formula divides by 0.01, producing a very large required corpus; if that gap were 3 percentage points instead, the required corpus would be roughly a third the size. This is real, important, and worth understanding before you anchor to any single number this calculator produces — test a few different return and inflation assumptions rather than trusting one output.
Is this the only way to calculate a retirement number?
No. This is one common simplified method — a perpetuity-style approximation that assumes withdrawals continue indefinitely at a steady real rate. More detailed retirement planning would model a finite drawdown period explicitly (your corpus actually depleting to zero after a set number of years), account for changing expenses in later life, and factor in other income sources like pensions or annuities. Treat this calculator's output as a rough planning anchor, not a precise target.
Does Shunya offer retirement planning advice?
No — this calculator is educational only and does not constitute personalized financial advice. Shunya's CA team handles company registration, tax filing, and compliance; for retirement and investment planning, work with a qualified financial advisor.
This tool is for quick estimation only and is not a substitute for professional financial advice. The perpetuity approximation used here is a common planning simplification, not an exact projection of your future finances.
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