Retirement planning: Want to draw ₹50,000 monthly income? Here's how much you need to invest — Maths explained
Smart financial planning for your retirement would include not only relying on savings to get by but also using your investments to generate monthly income that suits your lifestyle and requirements. Thus, retirement planning demands a careful analysis of various factors, foreseeable or not.
An option that investors can choose to continue earning from their investment even after retirement, and keep the corpus invested, is the systematic withdrawal plan (SWP). This feature allows mutual fund investors to withdraw fixed amounts at regular intervals — on a monthly or quarterly basis, while keeping the corpus invested.
It is a popular method for monthly or quarterly “encashment” by retired individuals or for supplemental cash flow, as per a Clear Tax report.
- The first step is to identify your goals and aspirational lifestyle post-retirement. This includes your family situation, health status, possible devaluation of net worth due to inflation and other factors.
- The next step is to assess your current financial status and earning potential against monthly spends in the present and likely additions in the future. This exercise will help determine how much corpus you will require to accumulate by the time to retire to maintain the lifestyle you want.
- It is best to start as early as possible so that you can take advantage of the power of compounding — no matter your choice of investment. Be it safer avenues such as government schemes or the equity markets, nothing adds up better than a longer tenure for returns.
- Choose diverse investment paths as per your requirements, goals and age. For those who start young, a higher allocation towards equities can slowly be tapered toward more conservative options as you age. India provides various asset classes to invest in, such as bank deposits, bonds (fixed income), equities, cash and cash equivalents, real estate and more.
- You can also choose investment options based on your salary and tax exemption requirement, as government schemes such as the PPF, EPF, NPS and NSC allow you to build a retirement corpus, while providing some tax benefit at the end of tenure.
- Further, it is best to also plan for emergencies with a separate fund and/or insurance cover to avoid depleting your retirement savings due to unforeseen circumstances.
- A safe calculation that CAs suggest to roughly estimate your retirement corpus is “300 x current monthly expenses”, to be adjusted periodically.
Today, we calculate how much investment is required for a person seeking a monthly income of ₹50,000 after retirement.
- Starting at age 20
Assuming you start saving at age 20, for retirement at age 60, and an estimated life expectancy of 85 years, and inflation growth of 6%, in order to draw ₹50,000 per month after retirement, you will need to invest ₹13,114 per month in investment tools that give you at least 12% returns, to accumulate a corpus of ₹15.42 crore.
This calculation also assumes that you will remain invested for at least 6% returns and have no other retirement savings or investments.
- Starting at age 25
Assuming you start saving at age 30, for retirement at age 60, and an estimated life expectancy of 85 years, and inflation growth of 6%, in order to draw ₹50,000 per month post retirement, you will need to invest ₹17,928 per month in investment tools that give you at least 12% returns, to accumulate a corpus of ₹11.52 crore.
- Starting at age 30
Assuming you start saving at age 30, for retirement at age 60, and an estimated life expectancy of 85 years, and inflation growth of 6%, in order to draw ₹50,000 per month after retirement, you will need to invest ₹24,650 per month in investment tools that give you at least 12% returns, to accumulate a corpus of ₹8.61 crore.
- Starting at age 35
Assuming you start saving at age 30, for retirement at age 60 and an estimated life expectancy of 85 years, and inflation growth of 6%, in order to draw ₹50,000 per month after retirement, you will need to invest ₹34,265 per month in investment tools that give you at least 12% returns, to accumulate a corpus of ₹6.43 crore.
- Starting at age 40
Assuming you start saving at age 30, for retirement at age 60 and an estimated life expectancy of 85 years, and inflation growth of 6%, in order to draw ₹50,000 per month post retirement, you will need to invest ₹48,630 per month in investment tools that give you at least 12% returns, to accumulate a corpus of ₹4.81 crore.
Jocelyn Fernandes is a journalist and editor with nearly 13 years of experience covering the business, corporate, economy and markets beats in news.<br> As chief content producer for around three years at Livemint (Hindustan Times), Jocelyn publishes breaking stories, explainers, features and live blogs on a range of business and economy topics, including the Budget, corporate developments, stock markets, income tax, money and personal finance, cryptocurrency, government policy, impact of US tariffs, international developments and more.<br> Jocelyn's writing philosophy is focused on delivering news in an accurate and accessible format for readers. She thus focuses her news coverage on explainers and FAQs in order to breakdown business, corporate, economic, and policy topics that are of importance to everyday readers.<br> She holds a Bachelors in Mass Media (BMM) and Post Graduate Diploma (PGD) in Journalism and Communication and has previously written for online business and markets news site Moneycontrol (Network18), Business-to-business (B2B) trade publications — the industry magazines Power Today and Solar Today (ASAPP Media), and the national news agency United News of India (UNI).<br> Outside of work, Jocelyn keeps up-to-date with local and international news, enjoys reading fiction books, novels and short stories, and enjoys movies, travelling and art. <br> She can be found on X and LinkedIn, and reached by email: <a href="jocelyn.fernandes@htdigital.in">jocelyn.fernandes@htdigital.in</a> <br> X/ Twitter handle: <a href="https://x.com/scribeJocelyn">@scribeJocelyn</a> <br> LinkedIn: <a href="https://in.linkedin.com/in/jocelyn-fernandes-journalist">LinkedIn</a>
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HomeMoneyPersonal FinanceRetirement planning: Want to draw ₹50,000 monthly income? Here's how much you need to invest — Maths explained
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