Retirement Planning (Via Target)

How this Retirement Calculator works

You tell the calculator the retirement amount you want in today’s money and it does the rest. First it grows that amount by inflation to find what it will actually cost by the time you retire. Then it grows your current savings at your expected return and subtracts it, so you only save for the shortfall. Finally it works out the monthly saving needed to cover that shortfall.

How it is computed

• A = retirement amount in today’s money, g = inflation, Y = years to retirement
• S = current savings, i = monthly return (annual ÷ 12), n = months to retirement

Worked example

Wanting ₹50,00,000 (in today’s value) at retirement, aged 30 retiring at 60, with 6% inflation, 8% returns and ₹1,00,000 already saved: ₹50 lakh grows to an inflation-adjusted ₹2,87,17,456 by age 60. Your current savings grow to ₹10,93,573, leaving a remaining target of ₹2,76,23,883. Covering that needs a monthly saving of about ₹18,535 — ₹66,72,617 invested over 30 years, with the remaining ~₹2.2 crore coming from growth. The chart shows your corpus climbing to the inflation-adjusted target.

Things to keep in mind

• Because the target is inflation-adjusted, the corpus you actually need is far larger than the figure you type in — that is the whole point of planning in today’s money.
• The required monthly saving falls sharply the earlier you start and the more you have already saved.
• Returns and inflation are assumptions, not guarantees, so revisit the plan every few years and step up your saving as your income grows.