"How much should I invest for retirement?" is the wrong first question. The right first question is: "How much will I need to spend, every month, 20-30 years from now?" Once you answer that, the SIP number falls out of the maths — no guessing required.
| Input | Why it matters |
|---|---|
| Current monthly expense | Starting point for future expense projection |
| Years to retirement | How long inflation compounds your expenses, and how long your SIP has to grow |
| Expected inflation (use 6%) | What your expenses will actually cost in future rupees |
| Post-retirement years (use 25-30) | How long the corpus must last and keep growing |
Take your current essential monthly expense (exclude EMIs that will end, include healthcare which will rise) and grow it at 6% inflation for your years to retirement.
Example: Rs 50,000/month today, 25 years to retirement → future value ≈ Rs 2,15,000/month (roughly 4.3x due to compounding inflation).
A commonly used rule: your corpus should be roughly 25-30 times your annual expense at retirement, assuming the corpus stays partly invested and continues to grow modestly during retirement (covering longevity and further inflation).
Rs 2,15,000/month × 12 = Rs 25.8 lakh/year → corpus needed ≈ Rs 6.5-7.7 crore.
This large number is normal — it's future value for a future lifestyle, not today's rupees. Don't let the size discourage you; the SIP maths handles it.
Using an assumed long-term equity return of 11-12% and a 25-year investment horizon, a flat monthly SIP needed to reach a ~Rs 7 crore corpus is roughly Rs 30,000-35,000/month. But almost nobody starts at that number — and they don't need to, if they step up the SIP.
A step-up SIP increases your monthly investment by a fixed percentage every year, matching typical salary growth. This dramatically lowers the starting amount needed for the same end corpus.
| Approach | Starting SIP | Corpus in 25 yrs (approx, 12% return) |
|---|---|---|
| Flat SIP | Rs 30,000 | ~Rs 6.8 crore |
| Step-up SIP (10%/year) | Rs 15,000 | ~Rs 6.9 crore |
Starting at half the amount and stepping up 10% a year gets you to roughly the same place — because your contributions grow with your income instead of losing relative value to inflation. This is why starting early with a modest, increasing SIP usually beats waiting to "afford" a large flat one.
For a target future monthly expense of Rs 1,00,000 (in today's terms) and a 10% annual step-up, here's an approximate starting SIP by age (assuming retirement at 60, 12% long-term return):
| Current age | Years to retirement | Approx starting SIP |
|---|---|---|
| 30 | 30 | Rs 6,000-8,000 |
| 40 | 20 | Rs 15,000-18,000 |
| 50 | 10 | Rs 45,000-55,000 |
The pattern is unmistakable: every decade of delay roughly triples the SIP needed for the same outcome. This is the single strongest argument for starting retirement SIPs in your 20s or 30s, even with a small amount.
This glide path matters as much as the SIP amount — a great corpus built over 25 years can still take a bad hit if it's fully in equity the year before you retire.
The exact SIP number depends entirely on your inputs — nobody can give you a universal figure without knowing your expenses, age, and goals. What matters more than the precise number is starting now with a realistic amount, stepping it up every year, and reviewing the plan every few years as your income and expenses change. For related maths on early starts, see our piece on step-up SIP vs normal SIP.