Retirement Planning India 2026: How Much You Actually Need to Save

Your retirement corpus is your first-year expenses in retirement divided by the withdrawal rate you plan to use. If you spend ₹6 lakh a year today, assume 6% inflation and retire in 20 years, your first-year expense is about ₹19.24 lakh, and a 3.5% withdrawal rate needs about ₹5.50 crore. Every input is an assumption, so this page shows how the answer moves when each one changes.

The formula, step by step

1. Take your actual annual household spending today, not your income.
2. Inflate it to your retirement year: spending × (1 + inflation)^years.
3. Divide by your withdrawal rate. A 4% rate is 25 times first-year expenses, 3.5% is about 28.6 times, and 3% is about 33.3 times.
4. Subtract guaranteed income you expect, such as pension or rent, before dividing.

The "25x" rule is just 1 ÷ 4%. Whether 4% suits you depends on inflation, your returns and how many years the money must last, which the tables below test. No withdrawal rate is safe for every household or every market.

Corpus needed for the 20-year, 6% case

For ₹6 lakh of spending today and 20 years at 6%, first-year expense is ₹19.24 lakh. The corpus is that amount divided by the withdrawal rate. The last column deflates the corpus back to today's purchasing power.

The gap between the last two columns is the point. A ₹5.50 crore corpus in 20 years buys what about ₹1.71 crore buys today, which is why a number from an old article or a friend's plan rarely transfers to your situation.

How long a corpus lasts

This table starts withdrawing the stated share of the corpus in year one, raises each year's withdrawal by 6% inflation, and lets the balance earn the return shown after costs and tax. It assumes a steady return, so it ignores bad early years, which can cut these figures.

A 4% start lasts about 29 to 42 years in this model, depending on the return, while 5% lasts 23 to 29 years. For a 30-year retirement (60 to 90), a 4% start at a 7% return falls just short at 29 years. Plan with a lower return than you hope for, and recheck every few years.

What you need to save each month

The monthly saving that reaches a target is target ÷ [((1 + r/12)^(12n) − 1) ÷ (r/12)], with r the assumed annual return, n the years and contributions at each month-end. The returns below are assumptions, not forecasts, and they are before tax.

Existing savings shorten this. Subtract existing savings × (1 + r)^n from the target before using the formula. Raising your saving each year lowers the starting amount; try our SIP calculator and step-up SIP calculator.

What the rules say about the main vehicles

• PPF: India Post lists 7.1% a year, compounded yearly (page updated 19 October 2026). The Finance Ministry kept rates unchanged for October–December 2026.
• NPS investment choice: PFRDA allows up to 75% equity under Active Choice. Under Auto Choice, LC75 holds 75% equity up to age 35, falling to 15% from 55. See our Auto vs Active comparison.
• NPS exit (non-government subscribers): up to 80% as a lump sum and at least 20% to buy an annuity at normal exit, per PFRDA's page.
• Tax: the extra ₹50,000 NPS deduction, earlier Section 80CCD(1B), is now Section 124(3) of the Income-tax Act, 2025. Section 80C is now Section 123, capped at ₹1,50,000. Neither is available in the default new regime (section 202), and Section 124(5) bars claiming the same amount under both.

For how these compare, see NPS vs PPF, NPS vs EPF, the UPS vs NPS guide for central government staff, and ELSS funds. When you draw income, a systematic withdrawal plan is one option.

Treat health costs as a separate line

Health premiums usually rise faster than general prices, and employer cover often ends at retirement. Take a real premium quote for your age, then grow it at a higher rate than your general inflation. The growth rates below are illustrative, not forecasts.

Buy a standalone policy well before retirement, because underwriting tightens with age; see the senior citizen health insurance guide and the guide to pre-existing conditions.

Mistakes that distort the number

• Using income instead of actual spending, or counting a home loan EMI that ends before you retire.
• Using a return higher than you would accept as a long-run average.
• Ignoring tax on withdrawals and costs when you pick the return.
• Forgetting that a corpus in 20 years is worth far less in today's rupees.
• Never rechecking. Revisit the numbers every year or two as spending, inflation and returns change.

These are planning illustrations, not advice or forecasts.