- How much you need
- Where retirement money can sit
- From growth to buckets
- Turning the corpus into income
- Tax when you withdraw
- Health cover
- How to review your plan
- Find your numberOur retirement calculator shows the corpus you will have against the corpus you need.
- Count what you already haveEPF, NPS and PPF are often the biggest part. The EPF calculator estimates your balance at 58.
- Retiring within five years?Use our year-by-year checklist.
How much you need
You need a corpus that can pay your expenses, rising with inflation, for 30 years or more after you stop working. For most people that works out to 25 to 30 times their yearly spending in retirement, after counting any pension. A simple way to estimate it:
- Start from what you spend today. Remove what will end, such as EMIs, commuting and school fees, and add what will start, such as health insurance premiums, travel and help at home.
- Grow it by inflation to your retirement year. At 6% a year, spending roughly doubles in 12 years.
- Multiply by 25 to 30. That is a first check on the corpus you need.
- Subtract what you will already have. EPF, NPS, PPF, mutual funds, deposits, gratuity and leave encashment, grown to the same year.
The gap is what you still need to build. The retirement calculator does this for you and shows the monthly investment that would close it.
Where retirement money can sit
| Where | What it is good for | What to watch |
|---|---|---|
| EPF | A safe, steady base built from your salary, with interest declared each year | Usually covers only part of retirement spending |
| NPS | Low-cost, long-term saving with a choice of equity share, locked until 60 | Part of the corpus must buy an annuity at exit |
| PPF | Safe, tax-free saving over 15 years, extendable in blocks of 5 | A yearly deposit limit, and partial withdrawals only after the first few years |
| Equity mutual funds | Growth that can stay ahead of inflation over long periods | Prices fall as well as rise; not for money needed in the next few years |
| Debt funds and deposits | Steadier money for the years just before and after you retire | Returns may not keep up with inflation over decades |
| Senior Citizens Savings Scheme | Government-backed income after 60 | An investment limit and a fixed term |
From growth to buckets
Far from retirement, most of the money can be in growth assets. Close to it, the money you will spend first should already be somewhere safe. A common way to organise this is in three buckets:
- Spending: the next one to two years of expenses, in savings, liquid funds or short deposits.
- Steady: years three to seven, in debt funds, the Senior Citizens Savings Scheme or conservative hybrid funds.
- Growth: money for year eight onward, in diversified equity and index funds, to keep the corpus ahead of inflation.
Move into the safer buckets a little each year over the last five years, not all at once. That spreads the risk of selling on a bad day.
Turning the corpus into income
In retirement, your income usually comes from three places: a pension or annuity, regular withdrawals from your investments, and interest from safe savings. EPS pension and an NPS annuity are small but guaranteed for life, so treat them as the floor of your income. A systematic withdrawal plan can pay a monthly amount from mutual funds. Keep the withdrawal rate sensible: much more than 4% of the corpus in the first year, rising with inflation, raises the risk of running out.
Tax when you withdraw
- EPF is usually tax-free when withdrawn after five years of continuous service, including service with earlier employers.
- Gratuity and leave encashment are fully exempt for government employees. For others, gratuity is exempt up to ₹20 lakh and leave encashment up to ₹25 lakh over your working life.
- Mutual fund withdrawals are taxed as capital gains. Spreading sales across financial years uses the yearly tax-free limit on long-term equity gains more than once. Our capital gains tax calculator shows the tax on a sale.
Tax rules change, so check the rules in force, or ask a tax professional, before you withdraw.
Health cover
Arriving at retirement with no health cover of your own is one of the most expensive mistakes. Cover through your employer usually ends when you leave. Buy your own policy while you are still working, so waiting periods can run out before you need it. Our insurance planning guide covers how much to buy.
How to review your plan
Check your plan once a year and after any big change: a new job, a move, a child, an inheritance. Each time, ask whether you are still on track for the number, whether the money you need in the next few years is already safe, and whether your nominees and will are up to date.
Want someone to look at your numbers?
Invsify is a SEBI-registered investment adviser (INA000020572). Invsify Private costs ₹8,999 a year, fixed, with no commissions, and covers your goals, investments, insurance and tax together. The first call is free, with no obligation.