Personal Finance
5 min read
- By Priyesh Mishra
Retirement Corpus: The Honest Number for Your Age
You want Rs. 5 crore by 60. You are 32. Assume 10% equity return. Monthly SIP needed: Rs. 16,800. Wait till 40 to start, and it jumps to Rs. 55,000. More than triple the same outcome. Starting date is the single biggest variable in retirement math. Bigger than return (which you cannot control), bigger than the corpus target (which scales with lifestyle). The first 5 years of SIP contribute modestly to final corpus; the last 5 years dominate. But the last 5 years exist only if you started early.
By the end, you will know the monthly SIP for your target corpus and age, the inflation adjustment that determines "real" target, and why the back-loaded compounding curve makes early starts so disproportionately valuable.
The math
Monthly SIP needed = Target x r / ((1+r)^n - 1), where r is monthly return rate, n is months. At 10% annual (0.833% monthly) for 28 years (336 months), the factor ~= 0.00041. So Rs. 5 crore x 0.00041 ~= Rs. 20,500/month. Start at 40 (20 years = 240 months): factor ~= 0.00132 to Rs. 5Cr x 0.00132 ~= Rs. 66,000/month. The factor is multiplicative in n; doubling the tenure roughly halves the required SIP (slightly better due to compounding on compounding).
At 8% return (conservative): SIP requirements roughly 25% higher. At 12% (aggressive, equity-heavy): roughly 20% lower. Don't over-optimise the return assumption. 10% is the standard planning benchmark for Indian equity-heavy long-term portfolios.
Why time > amount. The compounding tail
The last 10 years of a 30-year SIP contribute > 60% of the final corpus. The first 10 years contribute < 15%. Compounding is a tail-weighted process. And the tail exists only if you start early. Put differently: doubling your SIP amount at age 40 cannot recover what five years of compounding from age 32 would have produced. This is the single most important math in retirement planning, and the one most people feel too late.
Worked example: Two siblings, Rs. 20k/month each. A starts at 25, stops at 35 (10 years, total Rs. 24L invested). B starts at 35, continues to 60 (25 years, total Rs. 60L invested). At 10% return: A ends with Rs. 3.6 crore at 60. B ends with Rs. 2.65 crore at 60. A invested 40% of what B did and has 36% more money. Compounding on the early capital rolls up dramatically; B's late start cannot catch up even with more capital over more years.
Inflation. The silent killer
Rs. 5 crore in 2026 is not Rs. 5 crore in 2056. At 6% inflation, real value is ~Rs. 85 lakh. Your "target corpus" should be your required future annual expense x 25-30. If you need Rs. 15 lakh annual spending (today's rupees), that inflates to ~Rs. 86 lakh annual in 30 years at 6% inflation. Corpus needed: 30 x Rs. 86L = ~Rs. 25.8 crore. Without inflation adjustment, the Rs. 5 crore target is a 20% underfunded plan.
Inflation is the silent killer
Inflation is the silent killer
Step-up SIP
Expected return varies by decade
Key Takeaways
- SIP formula: Target x r / ((1+r)^n - 1).
- Starting 8 years later triples the required monthly contribution.
- Last decade of SIP contributes > 60% of corpus; compounding is tail-weighted.
- Adjust target for inflation. Rs. 5 crore in 30 years != Rs. 5 crore today.
- 10% is an equity-heavy long-term assumption; stress-test with 8% for safety margin.
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