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How to Calculate Your Retirement Corpus?


A key element of financial planning is considering your retirement stage. As soon as you finish your working years, you should outline how you will cope with the time when you do not have a regular income. You will need to create a source of income for yourself. To do that, you will need to carefully calculate the amount you will need to maintain your lifestyle and then you will need to invest accordingly. 

Calculating your retirement corpus is a multi-step process. Saving early is the key to retiring early. Here are the steps you can follow to estimate your retirement corpus:

1. Work Out the Number of Years You Have Until Retirement 

Before you create an outline for your retirement savings and investment, you need a timeline. If you plan to retire at the regular age of 60, then estimate how much time you have left until then. If you want to retire sooner, then that’s your age limit to go by. Either way, you need a definite timeline to plan your investments accordingly. 

2. Account for Inflation 

The cost of living rises every year. A rupee you earn today will not be of the same value ten years down the line. Inflation is an important factor to consider when calculating your retirement corpus. It impacts your expenses and the returns you will earn on your investment. Experts suggest taking into account a 6%-8% inflation rate. 

3. Estimate Your Annual Expenses Post Retirement 

Do you plan to lead the same lifestyle after retirement, or will you pare down on certain expenses you have at present? Do you want to shift to a different city or lead a nomadic lifestyle? These are some questions to get out of the way when planning your retirement. Based on these inputs, you need to come up with an estimate of how much your annual expenses will add up to. Don’t forget to take inflation into account while calculating your yearly expenses. 

4. Choose Your Investment Avenues and Expected Return

Once you have your expenses outlined, you have to decide your investments. Make sure you diversify your retirement investment into different products to get the best returns. Some options to choose from are National Pension System (NPS), mutual funds or even direct equities if you have the risk appetite for it. You can check historical returns generated by these investment avenues to have an understanding of the indicative return you can expect as an investor. Planning your retirement with the help of these tools will allow you to make near-accurate estimations of your retirement income. 

Remember the principle of ‘higher the risk, higher the expected return’. Exposure to equity as an asset class has the potential to generate higher returns compared to other asset classes, but may carry higher risk. But, financial experts also opine that by staying invested over the long term, some years of low/negative returns and some years of impressive returns will make the average returns quite reasonable.

5. Life Expectancy:

Life expectancy tells us about the average age a person is expected to live. In India average life expectancy currently is 70 years and with better medical facilities, it cannot be denied that it will go up in future.

6. Calculate Inflation Adjusted Return Pre and Post Retirement

The inflation-adjusted return is the measure of return that takes into account the time period's inflation rate. The purpose of the inflation-adjusted return metric is to reveal the return on an investment after removing the effects of inflation.

For example, if expected return on investment (ROI) is 12% and the inflation rate for the period is 7%, inflation adjusted return will be: ((1+ROI)/ (1+Inflation Rate)) *100

= ((1+12%)/ (1+6%)) *100 = 5.66%

7. Calculate Your Retirement Corpus 

Now that your investment avenues are outlined, you can estimate your retirement corpus easing using any financial calculator or a spreadsheet program.

Case Study

Mr. Sunil is currently 35 years old and planning to retire at the age of 60. His current yearly expenses are Rs. 9,00,000. Expected return on investment is 12% before retirement and 8% post retirement. Average inflation is assumed to be 7%. Life expectancy is assumed to be 90 years.

Calculation of Retirement Corpus in 4 Steps (Using a Microsoft Excel):

Step 1: Calculation of years to retirement: Retirement Age – Current Age = 60 – 35 = 25 years

Step 2: Calculation of yearly expenses at the retirement age:  You can calculate yearly expenses using ‘FV (Future Value)’ function. Yearly expense at the retirement age will be Rs. 48,84,689 (apx)


Step 3: Calculation of inflation adjusted return: ((1+RoI)/(1+Inflation Rate))*100

Post-Retirement Inflation Adjusted Return = ((1+8%)/ (1+7%)) *100 = .93%

Step 4: Calculate Post Retirement Life in Years = Life Expectancy – Retirement Age = 90 – 60 = 30 years 

Step 5: Calculation of Retirement Corpus:  You can calculate yearly expenses using ‘PV (Present Value)’ function. Retirement corpus required will be Rs. 12,73,61,182.



By following the steps mentioned above, you can arrive at your retirement corpus and plan your investments better. Make sure to:

  • Have a clear retirement plan. 
  • Account for inflation.
  • Diversify your investments.  

With ICICI direct, you will have access to multiple financial products like NPS, Mutual Funds, Insurance Products, Direct Equities, etc. You can immediately start investing in these products based on your financial goals and risk profile and take a step towards financial freedom.

Disclaimer:- ICICI Securities Ltd.( I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Venture House, Appasaheb Marathe Marg, Prabhadevi, Mumbai - 400025, India, Tel No:- 022 - 2288 2460, 022 - 2288 2470. I-Sec is a Member of National Stock Exchange of India Ltd (Member Code:-07730) and BSE Ltd (Member Code :103) and having SEBI registration no. INZ000183631. Name of the Compliance officer (broking): Mr. Anoop Goyal, Contact number: 022-40701000, E-mail address: complianceofficer@icicisecurities.com. Investment in securities market are subject to market risks, read all the related documents carefully before investing. The contents herein above shall not be considered as an invitation or persuasion to trade or invest.  I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. PFRDA registration numbers:  POP no -05092018. We are distributors of NPS and all disputes with respect to the distribution activity would not have access to Exchange investor redressal or Arbitration mechanism.

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