Published: 2026-06-17 · By Bhanuprakash Sardesai
7. Retirement Planning: The 4% Rule and Inflation
Retirement planning is arguably the most important financial goal you'll ever set – yet it's the one most Indians neglect until it's dangerously late. The question "How much do I need to retire?" has a deceptively simple answer: you need enough to generate your desired monthly income for the rest of your life without running out of money.
The rule of thumb is the 4% Safe Withdrawal Rate (SWR): multiply your annual expenses by 25 to arrive at your required retirement corpus. So if you need ₹50,000 per month (₹6 lakh annually) in today's terms, you'd need approximately ₹1.5 crore. However, this rule was developed for the US market and 30-year retirements. In India, with higher inflation, a more conservative 3-3.5% withdrawal rate may be prudent.
But here's the critical adjustment: inflation. If you're 30 years old and plan to retire at 60, your expenses will have inflated dramatically by then. Assuming 6% inflation, ₹50,000 monthly expenses today will balloon to approximately ₹2.87 lakh per month in 30 years. That means your retirement corpus target needs to be about ₹8.6 crore (at 4% SWR) – not ₹1.5 crore!
This is why starting early is non-negotiable. You can instantly estimate your retirement needs using our free online SIP Calculator and FIRE Number Calculator.
The path to retirement involves three phases: Accumulation (working years – invest aggressively in equity), Transition (5-7 years before retirement – gradually shift some funds to debt), and Distribution (retirement – systematic withdrawals). Use our FIRE Number Calculator to determine your retirement corpus target.
← Back to Blog Index