📚 Financial Education Library › Article #7
Published: 2026-06-21 · By Bhanuprakash Sardesai
7. Retirement Planning: The 4% Rule and Inflation
"How much is enough for retirement?" is the question that freezes most investors. The good news is that the answer is computable, not mystical. Use the 25× rule, layer in a realistic safe withdrawal rate, adjust for inflation, and the supposedly impossible number turns into a monthly SIP you can actually plan around.
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.
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