Retirement at 45: Do you want to retire with Rs 60,000 inflation-adjusted monthly income? Know what may be your monthly, yearly and lump sum investment for that

Retirement at 45: Retirement means financial freedom where you can bear your own expenses through passive income. Where you don't have to actively work to earn your livelihood. At such a stage, you need an inflation-adjusted amount for life. Your retirement corpus should not run dry. Many youngsters aspire to early retirement these days. But how do you calculate the amount needed for a financially free retirement? What may be your retirement corpus, and what can be the investment amount to achieve that goal? If you are a 25-year-old person who wants to retire at 45 and requires an amount for the next 35 years, what may be your retirement corpus, and how much lump sum, yearly and monthly amounts may you need to invest to achieve that target? Get answers to these questions here. 

How to calculate retirement corpus

To calculate your retirement corpus, some important parameters are- 

• Expected inflation-adjusted monthly/yearly amount required 
• Amount needed to cover other post-retirement financial goals such as travel
• Amount required to cover health expenses
• Current age
• Retirement age
• Life expectancy
• Pre-retirement return
• Post-retirement return
• Inflation 

Expenses that may reduce post retirement 

Some expenses such as conveyance expenses and office-related expenses, may reduce once you retire.

Calculations for story

• Monthly expenses- Rs 55,000
• Age- 25 
• Retirement age- 55
• Life expectancy- 80 years
• Inflation- 6 per cent
• Pre-retirement return- 12 per cent
• Post-retirement return- 7 per cent

What we will calculate 

• Retirement corpus
• Monthly SIP investment
• Yearly SIP investment 
• Lump sum investment

Expenses required till 80 years of age

If you are 25 years old and your monthly expenses are Rs 60,000, in the first year of your retirement, the same expense will rise to an estimated Rs 1,92,428 at a 6 per cent inflation rate.

In the final year of your retirement, the expected monthly expenses will rise to an estimated Rs 13,95,301. 

Estimated corpus required

The overall estimated amount required from the age of 45 till 80 will be Rs 25,73,18,233.

However, if money is invested in an instrument that is giving a 7 per cent annualised return and the inflation rate is 6 per cent, the estimated corpus required will be Rs 6,92,06,103 at 45 years of age.

But since you have been investing from the age of 25, let's see the estimated lump sum, yearly, and monthly investments you may need to achieve an Rs 6,92,06,103 corpus.

Lump sum investment for retirement corpus

The estimated one-time investment required will be Rs 71,74,373.

Yearly SIP investment for retirement corpus

The estimated yearly investment required will be Rs 8,57,586.

Monthly SIP investment for retirement corpus

The estimated monthly SIP investment needed for the corpus will be Rs 75,236.

(Disclaimer: This is not investment advice. Do your own due diligence or consult an expert for financial planning.)