How Much Retirement Corpus Should You Have? Here's How To Calculate It

For a major portion of our lives' young years, we work hard so that we get to live a carefree life after retirement, isn't it? Waiting for that golden period of your life after 20¨C30 years of hard work and even making a wish list of all you want to do during retirement is a common practise.

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Whether it's about visiting your dream destinations or taking up some hobbies post-retirement, one thing that cannot be ignored is the importance of having a corpus to take care of you once you retire.

And with the trend of early retirement increasingly gaining prominence among millennials and Gen Z, it's even more essential to create an adequate retirement corpus.

That is where the question of how to calculate the corpus arises, right? After all, both the absence and the inadequacy of the retirement corpus are harmful in their own ways.

How To Calculate Retirement Corpus

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If you too are among those who are confused about how to know the amount of retirement corpus to accumulate, you can take the help of a calculator introduced by India¡¯s market regulator, SEBI. SEBI launched an interesting calculator on its website a few months ago that can help you arrive at the retirement corpus required to be accumulated.

Here are the contents of the calculator and the format to help you arrive at the corpus amount required for retirement, after factoring in your current monthly and annual expenses, age, inflation, years left for retirement, etc.

We have taken an example as well to help you get a fair idea. Note that you can calculate the corpus by putting in values as per your current financial situation and plan.

Retirement Calculator To Help You Arrive At The Corpus Amount

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Also Read: F(N)AQ: How Do I Make My Retirement Corpus Last Longer?

Where To Invest For Retirement?

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Once you are aware of the retirement corpus required to be accumulated, the next step is to begin investing as soon as possible. But where to invest?

Given that inflation is a big factor that can eat away at your corpus if not factored in during calculation, isn't it better to invest in something that has proven to give inflation-beating returns and also outperformed most other investment avenues, especially in the long term? That's exactly why investing in equity mutual funds can be a good idea to accumulate a retirement corpus and maximise wealth creation.

Equity as an asset class has a history of outperforming both inflation and fixed income instruments like PPFs, bank FDs, etc by a wide margin over the long run. This in itself makes equity the most suitable asset class for achieving long-term financial goals, usually spanning over 5 years or more, such as retirement. As far as volatility is concerned, remember that while equities do tend to involve a high degree of volatility, that's mostly in the short term and not the long term, which thus makes them a suitable instrument to achieve long-term wealth creation for goals like a child's higher education corpus and retirement.

But if you are not comfortable investing in equities or want to know other options for accumulating a retirement corpus, click here.

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