Retirement planning starts with one question: what will your life cost when you stop working? Inflation makes that number much larger than today's expenses.
Step 1: today's expenses#
Add up the monthly expenses you expect to continue after retirement. Leave out costs that will end, such as a home loan EMI you will have repaid, and add new ones, such as higher medical costs.
Step 2: adjust for inflation#
| Item | Amount |
|---|---|
| Monthly expenses today | ₹50,000 |
| Monthly expenses in 25 years | ₹2,14,594 |
| Yearly expenses in 25 years | ₹25,75,122 |
Step 3: the corpus#
The amount you need at retirement depends on how long retirement lasts, the return on your savings after you retire, and inflation during retirement. The retirement planner works through these with your own numbers.