How Much Should You Save for Retirement?
Retirement planning is one of the most important financial decisions you'll make. The amount you need depends on your age, lifestyle expectations, and when you want to retire.
The 25x Rule
A widely used rule of thumb is to save 25 times your expected annual expenses in retirement. If you expect to spend ₹6 lakh per year, you need ₹1.5 crore. This is based on the assumption that you can withdraw 4% of your corpus annually.
How Much to Save Each Month
If you're 25 and want to retire at 60, you have 35 years. Assuming 12% returns and 6% inflation: To build a ₹5 crore corpus, you need to save about ₹8,000-10,000/month starting now, increasing by 10% annually.
Savings by Age Benchmarks
By age 30: 1x your annual salary saved. By 40: 3x salary. By 50: 6x salary. By 60: 8-10x salary. These are rough benchmarks and vary based on your retirement age and lifestyle.
Don't Forget Inflation
If you're 30 years from retirement and inflation averages 6%, your monthly expenses of ₹50,000 today will become ₹2.87 lakh by retirement. Always plan for inflated future expenses, not today's costs.