Start With the Expenses That Will Continue
List today's recurring household expenses and remove costs that will genuinely end before retirement. Add items that may rise, including healthcare, home support, travel and family commitments. Annual costs such as insurance, repairs and gifts should be converted into a monthly average.
Do not use a percentage of current salary. Two households with the same income can require very different retirement budgets.
Move Today's Expenses to the Retirement Date
If current retirement expenses are ₹1 lakh a month and retirement is 10 years away, 6% assumed inflation would make the first-year amount about ₹1.79 lakh a month. This is an illustration, not a forecast.
Use separate assumptions where useful. Medical and care costs may behave differently from ordinary household spending, and large one-time goals should not be hidden inside the monthly number.
Estimate the Portfolio-Funded Gap
| Step | Question | Planning output |
|---|---|---|
| 1 | What will retirement cost after inflation? | First-year annual spending |
| 2 | What reliable income will arrive? | Pension, annuity, rent or other income |
| 3 | What remains uncovered? | Annual withdrawal required from investments |
| 4 | How long may it last? | Retirement horizon and longevity buffer |
| 5 | What shocks need separate money? | Healthcare, repairs and family reserve |
Why the 25-Times Rule Is Only a Starting Point
Multiplying annual expenses by 25 implies a 4% first-year withdrawal. It is a useful mental shortcut, but it does not capture Indian inflation, taxes, changing asset allocation, uneven returns, fees or a long retirement.
A better plan simulates annual spending and returns, then stress-tests lower returns, higher inflation and living longer. Our calculator uses that cash-flow approach and lets you change every assumption.
Keep Three Pools Visible
- Near-term spending and emergency liquidity
- A medium-term stability pool for planned withdrawals
- Long-term growth assets intended to fight inflation
- A separate healthcare or care reserve where appropriate
- Existing pensions and annuities shown as income—not counted twice as corpus
Turn the Guide Into Your Retirement Numbers
Estimate the corpus, first-year income and long-term withdrawal path, then review how pensions, NPS, liquidity and family needs fit together.
Sources Checked
Sources last reviewed .
- SEBI Investor: Financial Goal Planner (opens in a new tab)
- SEBI Investor: Plan Early for Retirement (opens in a new tab)
- SEBI Investor: Asset Allocation Calculator (opens in a new tab)
The article copy is original SoHo Wealth editorial content. Source links are cited for factual verification of rules, frameworks and public guidance.
This article is for education and portfolio discussion only. SoHo Wealth is a distributor, not a SEBI Registered Investment Advisor. Tax and legal outcomes depend on personal facts.