Retirement Corpus Calculator
Retirement Corpus Calculator
How large a retirement fund you need to pay your monthly expenses, rising with inflation, for a set number of years — and the monthly SIP that would build it by the day you retire.
Retirement corpus
Expenses of $50,000 a month today, retiring in 25 years for 25 years, with 6% inflation, 12% return before retirement and 8% after
The corpus: a growing annuity of inflating expenses
- E
- today’s monthly expenses; E₁ is the same expenses at retirement
- g
- 1 + inflation as a decimal; expenses rise by this once a year
- i
- the post-retirement monthly rate: annual return ÷ 12 ÷ 100
- a
- what 12 start-of-month payments of 1 are worth at the start of the year: [1 − (1 + i) to the power −12] ÷ i × (1 + i)
- q
- (1 + i) to the power 12, one year’s growth. When g equals q the corpus is E₁ × a × Y
- Y
- the number of whole years in retirement
Worked example
Expenses of $50,000 a month today, retiring in 25 years for 25 years, with 6% inflation, 12% return before retirement and 8% after
Expenses at retirement: 50,000 × 1.0625 = $2,14,594 a month
i = 8 ÷ 1200; a = 11.5724; g ÷ q = 1.06 ÷ (1 + i)12 = 0.978763
Corpus = 2,14,594 × 11.5724 × (1 − 0.97876325) ÷ (1 − 0.978763) = $4,85,62,670
That is 18.9 times the first year's expenses, or $1,13,15,036 in today's money
SIP to build it in 25 years at 12%: $25,591 a month
Corpus for 50,000 a month today, retiring in 25 years at 6% inflation
| Return after retirement | 20 years in retirement | 25 years | 30 years |
|---|---|---|---|
| 6% | $4,93,70,968 | $6,14,71,619 | $7,34,76,956 |
| 7% | $4,48,14,681 | $5,44,94,755 | $6,36,32,659 |
| 8% | $4,08,15,942 | $4,85,62,670 | $5,55,21,020 |
| 9% | $3,72,98,155 | $4,35,00,088 | $4,88,01,031 |
How this differs from a FIRE number
This calculator plans a fixed retirement length. It finds the amount that, earning the post-retirement return, pays your expenses every month — raised each year for inflation — and runs down to zero at the end of the period. In finance terms it is the present value of a growing annuity. In the example, $50,000 a month today becomes $2,14,594 after 25 years of 6% inflation, and 25 years of it needs a corpus of about $4,85,62,670, which a SIP of $25,591 a month at 12% would build.
The FIRE calculator works differently. It divides a year’s expenses by a withdrawal rate such as 4%, a rule drawn from historical market data that aims to leave money over rather than to spend it all. The same $25,75,122 a year at 4% gives $6,43,78,061, far more than this calculator’s figure, because it plans for an open-ended retirement and for uneven returns. The corpus here is the smaller, planned-drawdown answer; it is only as safe as the assumptions behind it.
The whole path, and why the peak comes after you retire. The chart follows the fund from today. For the first 25 years the SIP and its returns build it up to the corpus, about $4,85,62,670 on the example. Then the expenses are paid out of it every month until it reaches zero at the end of year 50. You might expect the balance to fall from the day you retire. On the example it does not. In the first year of retirement the corpus earns about $39,16,315 while you take out $25,75,122, so it keeps growing and peaks in year 35 at about $5,76,50,101. That surplus is not spare money. Expenses keep rising by 6% a year, so the later, larger withdrawals need it, and the balance then falls faster each year. Whether the peak comes at retirement or later depends on the return after retirement compared with inflation and the length of the retirement. The summary above the chart gives the year. The teal line is the same balance in today’s money. It shows how much of the big number is inflation.
The biggest risk is outliving the plan, so choose the years in retirement generously. The return after retirement is assumed steady; a fall in the early years matters most. Expenses such as healthcare can rise faster than general inflation. Withdrawals and pension income may be taxable, which this before-tax figure ignores. The monthly SIP uses the same convention as the SIP calculator (annual return ÷ 12, instalments at the start of the month); a SIP that rises every year, from the step-up SIP calculator, can reach the same corpus with a smaller start. To check how long a given corpus lasts at a fixed withdrawal, use the SWP calculator. This is arithmetic on the figures you enter, not financial advice.
Frequently asked questions
How much corpus do I need to retire?
Enough to pay your inflation-adjusted expenses for every year of retirement at your expected return. For $50,000 a month today, retiring in 25 years for 25 years at 6% inflation and an 8% return after retirement, that is about $4,85,62,670.
Why is this usually lower than the FIRE number?
Because it spends the corpus down to zero over a fixed number of years, while a 4% withdrawal rate aims to last indefinitely and to survive poor markets. Use this when you are planning a set retirement length; use the FIRE calculator for an open-ended one.
What if I live longer than the years I entered?
The money runs out. Enter a generous number of years; adding five years to the plan costs far less than running short at the end.
Does the corpus include pension or other income?
No. Enter only the part of your expenses that your investments must pay for. If a pension will cover part of your spending, subtract it first.
Why does the balance keep rising after I retire?
Because at first the corpus earns more than you withdraw. In the example it earns about $39,16,315 in the first year of retirement against $25,75,122 of expenses. It peaks in year 35, then falls to zero at the end of year 50, as the inflation-raised expenses overtake the return.
Related calculators
References
- Brealey RA, Myers SC, Allen F. Principles of Corporate Finance. McGraw-Hill. Present values, annuities and growing annuities.
- Bengen WP. Determining Withdrawal Rates Using Historical Data. Journal of Financial Planning. 1994;7(4):171–180.
- Securities and Exchange Board of India (SEBI) / Association of Mutual Funds in India (AMFI). Mandatory risk statement for mutual fund communications: “Mutual fund investments are subject to market risks, read all scheme related documents carefully.”
- Central-bank inflation targets used as default inflation by currency: Reserve Bank of India (4% CPI, flexible inflation targeting framework); U.S. Federal Reserve (2% PCE); European Central Bank (2%); Bank of England (2% CPI); Bank of Canada (2%); Reserve Bank of Australia (2–3%); Bangko Sentral ng Pilipinas (3% ± 1). Actual inflation often runs above target.