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.
Age
Retirement years
Monthly expenses (at 6% inflation)
Yearly expenses (at 6% inflation)
25
₹60,000
₹720,000
26
₹63,600
₹763,200
27
₹67,416
₹808,992
28
₹71,461
₹857,532
29
₹75,749
₹908,983
30
₹80,294
₹963,522
31
₹85,111
₹1,021,334
32
₹90,218
₹1,082,614
33
₹95,631
₹1,147,571
34
₹101,369
₹1,216,425
35
₹107,451
₹1,289,410
36
₹113,898
₹1,366,775
37
₹120,732
₹1,448,781
38
₹127,976
₹1,535,708
39
₹135,654
₹1,627,851
40
₹143,793
₹1,725,522
41
₹152,421
₹1,829,053
42
₹161,566
₹1,938,796
43
₹171,260
₹2,055,124
44
₹181,536
₹2,178,432
45
1
₹192,428
₹2,309,138
46
2
₹203,974
₹2,447,686
47
3
₹216,212
₹2,594,547
48
4
₹229,185
₹2,750,220
49
5
₹242,936
₹2,915,233
50
6
₹257,512
₹3,090,147
51
7
₹272,963
₹3,275,556
52
8
₹289,341
₹3,472,089
53
9
₹306,701
₹3,680,414
54
10
₹325,103
₹3,901,239
55
11
₹344,609
₹4,135,314
56
12
₹365,286
₹4,383,432
57
13
₹387,203
₹4,646,438
58
14
₹410,435
₹4,925,225
59
15
₹435,062
₹5,220,738
60
16
₹461,165
₹5,533,982
61
17
₹488,835
₹5,866,021
62
18
₹518,165
₹6,217,983
63
19
₹549,255
₹6,591,062
64
20
₹582,210
₹6,986,525
65
21
₹617,143
₹7,405,717
66
22
₹654,172
₹7,850,060
67
23
₹693,422
₹8,321,064
68
24
₹735,027
₹8,820,327
69
25
₹779,129
₹9,349,547
70
26
₹825,877
₹9,910,520
71
27
₹875,429
₹10,505,151
72
28
₹927,955
₹11,135,460
73
29
₹983,632
₹11,803,588
74
30
₹1,042,650
₹12,511,803
75
31
₹1,105,209
₹13,262,511
76
32
₹1,171,522
₹14,058,262
77
33
₹1,241,813
₹14,901,757
78
34
₹1,316,322
₹15,795,863
79
35
₹1,395,301
₹16,743,615
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.)
