Retirement planning often sounds intimidating because it forces a single, uncomfortable question: Will the money saved today be enough for a life that may last 20–30 years without a salary?
The short answer is that there is no one-size-fits-all number. The ideal retirement corpus depends on factors such as income, lifestyle expectations, inflation, life expectancy, and investment choices. This guide breaks the problem down into practical, manageable steps.
Why Is Retirement Planning Necessary?
Retirement is no longer a short phase at the end of life. With rising life expectancy, many people spend nearly a third of their lives post-retirement. During this period:
- Regular income usually stops
- Healthcare expenses increase
- Inflation steadily erodes purchasing power
Without deliberate planning, savings that look sufficient today can fall short tomorrow.
How Do You Save for Retirement? The Core Rule
A commonly used rule of thumb is
You will need 70–80% of your pre-retirement monthly income every year after retirement.
Why not 100%?
Because some expenses, such as commuting and rent, will decrease, while others, including medical costs, lifestyle spending, and travel, can increase.
Example
If your current monthly expenses are ₹50,000, estimated retirement expenses will be around ₹35,000–₹40,000 per month.
Here are a few steps you can follow to plan your retirement.
Step 1: Estimate your Retirement Expenses
Start with your current monthly expenses and adjust costs like:
- Work-related costs like commuting expenses, office clothing and footwear, Relocation or rent near the workplace (if any), professional grooming & appearance, etc., can be reduced
- Healthcare and insurance expenses can be increased.
- Lifestyle choices like travel, hobbies, and family support can increase or decrease depending on the individual's lifestyle.
Then account for inflation. Know how to protect your retirement savings from inflation.
Inflation Reality Check
At a 6% inflation rate, expenses double every 12 years.
₹40,000 today can easily become ₹1,25,000–₹1,40,000 per month after 25–30 years.
Step 2: Decide your Retirement Age and Life Expectancy
While deciding on the retirement plan, 2 timelines matter the most:
- Retirement age: At what age do you want to retire (for example, 60)
- Life expectancy: This is the average number of years a person is expected to live. (assume 85–90 for safety.)
This gives a retirement duration of 25–30 years, which your savings must support.
Step 3: Calculate the Retirement Corpus
To calculate your Retirement corpus, you should calculate
- Estimate annual expenses during retirement
- Multiply it by the number of retirement years
- Adjust for returns during retirement
Rough Thumb Rule
For most salaried individuals:
- 25x–30x of annual expenses is a reasonable target corpus
Example
If annual retirement expenses are ₹12 lakh, the
Required corpus ≈ ₹3–3.6 crore
This number may sound huge, but long-term investing and compounding make it achievable.
Step 4: Deciding How Much to Save Every Month?
Your monthly savings depend on the following factors:
- Age at which you start
- Expected investment returns
- Risk appetite
General Guidelines by Age
| Age | Target Savings | Example (₹10L Annual Salary) | Status Check |
| 30 | 1x annual salary | ₹10 lakh | Early foundation |
| 40 | 3x annual salary | ₹30 lakh | Critical milestone |
| 50 | 6x annual salary | ₹60 lakh | Final push begins |
| 60 | 8-10x annual salary | ₹80-100 lakh | Retirement readiness |
| 67 | 10-12x annual salary | ₹100-120 lakh | Conventional target |
The earlier you start, the lower the monthly burden will be, due to compounding.
Step 5: Where Should Retirement Savings Be Invested?
Retirement savings should balance growth and stability. A few common investment options are
- Equity investments for long-term growth
- Saving in Digital Gold
- Debt instruments for stability and predictable income
- Government-backed retirement schemes for safety
- Gradual shift from equity to debt as retirement approaches
The key is diversification and periodic rebalancing.
Use the retirement calculator to estimate how much you will have to save monthly before you retire.
Common Retirement Planning Mistakes to Avoid
- Starting too late
- Ignoring inflation
- Underestimating medical expenses
- Relying only on fixed deposits or low-return products
- Not reviewing the plan every few years.
Retirement planning is not a one-time calculation; it is an ongoing process.
Conclusion
So, how much should you really save for retirement?
- Enough to replace 70–80% of your income
- Enough to last 25–30 years
- Enough to beat inflation and rising healthcare costs
The exact number will vary, but the principle remains constant: start early, save consistently, and invest wisely.
Using tools like the Jar app, automate your saving and investing journey.
Retirement planning is less about guessing the perfect number and more about building the habit of disciplined, long-term saving. The sooner it begins, the easier the journey becomes.
