One of the most common questions in retirement planning is how much money is enough to retire comfortably after age 60. While many people start with a target monthly expense, financial advisors say the amount you need depends not just on your current lifestyle, but also on how your expenses are likely to change after retirement, inflation, life expectancy, and the returns your investments are likely to generate by that time.

Let’s assume a family’s current monthly expenses are ₹1 lakh, of which ₹30,000 goes toward child-related expenses that will cease after retirement, and one person is the sole breadwinner of the household. Ideally, the family would require anywhere between ₹50,000 and ₹70,000 to maintain their current lifestyle, but the calculation isn’t that simple. While some expenses may go down, other costs, such as medical bills and rising inflation, may increase the family’s expenses by the time the sole breadwinner retires.

“Estimating retirement expenses involves much more than simply deducting child-related expenses. While expenses such as child-related expenses, commuting, work-related costs and home loan EMIs (if repaid) may reduce, others, including healthcare, health insurance, home maintenance, domestic help and leisure spending, are likely to increase with age,” said Harendra Zatakia, a Sebi-registered investment advisor and the founder of Wealth Aligned Financial Advisory.

Therefore, the retirement corpus should be based on the desired post-retirement lifestyle rather than a simple reduction in current expenses.

How much money would the family need after retirement?

If the individual is currently in their mid-30s and plans to retire at 60, the estimated post-retirement monthly expense in today’s value cannot be used directly. It must first be adjusted for inflation over the years leading up to retirement, said Ajay Kumar Yadav, Group CEO and CIO at Wise Finserv, explaining how the retirement corpus should be calculated in such a scenario.

Assuming 6% inflation before retirement, today’s ₹70,000 monthly expense will become approximately ₹3 lakh per month after 25 years.

The calculation is: ₹70,000 × (1.06)^25 = ₹3,00,431 per month

So, the annual expense at retirement becomes approximately ₹36.05 lakh.

Particulars Current monthly expense relevant for retirement ₹70,000Current annual expense relevant for retirement ₹8.4 lakhInflation assumed till retirement6% per annumMonthly expense at age 60 ₹3 lakhYearly expense at age 60 ₹36.05 lakh

Now, the important point is that expenses will not remain fixed after retirement. They will continue to rise every year.

If we assume monthly withdrawal, 5% post-retirement inflation, 7% post-retirement return and a 30- year retirement period from age 60 to 90, the base retirement corpus required at age 60 comes to approximately ₹8.10 crore.

AssumptionValueRetirement60Planning period30 years, from age 60 to 90First monthly withdrawal at age 60 ₹3 lakhPost-retirement inflation5%Post-retirement portfolio return7%Withdrawal frequencyMonthlyAssumptionValueBase corpus requiredAround ₹8.10 crore

This ₹8.10 crore is the mathematical base corpus. However, retirement planning should not be done with a very tight number. After adding a buffer for healthcare, taxation, longer life expectancy and unexpected family needs, the practical comfort range should be around ₹9 crore to ₹10.8 crore.

“Apart from child-related expenses, one must also consider home ownership, rent, existing loans, health insurance, dependent parents, spouse’s life expectancy, taxation, emergency fund and whether any pension or rental income will be available,” Yadav said.

How to start building a retirement corpus?

To build an estimated retirement corpus of up to ₹10.8 crore by age 60, the first step is to determine the monthly investment required over the next 25 years.

“This is often referred to as goal-based investing, where the investment strategy is driven by the retirement corpus rather than arbitrary savings targets,” Zatakia said, adding that the monthly investment will vary depending on the expected rate of return, which is influenced by the investor’s risk profile and asset allocation over the years.

“A conservative investor, with a higher allocation to debt, may need to invest a larger amount each month than a moderate or aggressive investor targeting relatively higher long-term returns,” he noted.

A 35-year-old earning around ₹1.5 lakh per month who is spending almost 70% from their income and targeting the estimated retirement corpus discussed above by age 60 would need to dedicate a significant portion of their income towards long-term investing.

Zatakia said that if the person is just starting their investment journey for retirement, the required savings rate could be as high as 35-40% of monthly income under the above illustration, although the exact amount should be determined through a financial plan rather than a thumb rule.

“More importantly, retirement planning should not be viewed as saving a fixed percentage of income every year. As income grows, investments should grow at a faster pace than lifestyle expenses,” he said.

According to Yadav, for someone in the 30s, a broad allocation in different type of assets can look like this:

Asset classSuggested allocationIndian equity funds55% to 65%Global funds10% to 15%Debt and fixed income15% to 25%

However, the allocation largely depends on a person’s risk appetite and retirement corpus goal.

Meanwhile Yadav also noted that one should invest in India equity funds for long-term wealth creation, global funds for diversification beyond India, debt and fixed income for stability and downside protection and NPS or other retirement-focused funds for disciplined long-term retirement saving.

Adding to the particulars of investment startegy for retirement, Zatakia also noted that retirement planning should not be viewed as saving a fixed percentage of income every year. “As income grows, investments should grow at a faster pace than lifestyle expenses.”

What is the 30x annual expenses rule for retirement?

According to Zatakia, the 30 times annual expenses rule is a useful starting point, but it should not be treated as a universal benchmark, as whether 30 times annual expenses is sufficient depends on several factors, such as healthcare costs, the number of dependents, and outstanding liabilities.

Also Read | Starting SIP at 25 vs 35: How a 10-year delay can shrink your retirement corpus

“For some individuals, a 30x corpus may be adequate, while others may require significantly more. For example, someone retiring early, supporting a dependent family member, carrying a home loan into retirement, or expecting higher healthcare expenses may need a larger corpus,” he noted.

On the other hand, someone with lower expenses or stable retirement income may require less. Thumb rules are useful for a quick estimate, but they cannot replace a personalised retirement plan, he warned, emphasising on the need for building a personal retirement plan.

What did AI suggest for planning retirement under same scenario?

Assuming the family currently spends ₹1 lakh a month, of which ₹30,000 is for the child’s education (an expense that is likely to end before retirement), the retirement corpus should be based on the remaining ₹70,000 monthly lifestyle expenses, adjusted for inflation until age 60.

Also Read | ₹1,800 monthly EPF contributions could build ₹19 lakh retirement nest egg

Under these assumptions, the ₹70,000 monthly expense grows to roughly ₹3 lakh per month by age 60. To sustain this inflation-adjusted income through retirement, the person would need a retirement corpus of approximately ₹7-8 crore, ChatGPT said in its response.

How to start investing now:

Invest consistently through equity mutual fund SIPs for long-term growth, increasing contributions as income rises.Maintain an emergency fund covering 6-12 months of expenses before investing aggressively.Use EPF/NPS as the debt component of the portfolio and review the asset allocation periodically.As retirement nears, gradually shift a portion of the corpus from equity to debt to reduce market risk.

While AI can estimate a retirement corpus based on current expenses, retirement age and inflation assumptions, it did not give much details about real-world variables such as inflation after retirement and how the monthly expenses would also continue to grow after the person retires.

A financial planner is more likely to take into account changing spending patterns over different life stages, rising healthcare costs, longevity risk, tax implications, asset allocation, and the sequence in which retirement savings are withdrawn, while giving retirement advice, something AI may not be equipped to do.