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Saving Rs 1 crore for retirement may sound like enough, but inflation and rising expenses can shrink its real value.
Smart planning and right calculations are key to stretching your retirement funds. (Representative Image)
For many people, saving Rs 1 crore for retirement feels like a big milestone. While it might take years of discipline to reach this number, for high earners, it can be achieved in less than a decade with proper planning. But the real question remains: will this amount actually last long enough in retirement?
Financial planners often suggest building a strong retirement corpus through systematic investment plans (SIPs). These allow you to start small, gradually increase contributions, and benefit from the power of compounding. When you factor in inflation and rising expenses, Rs 1 crore may not stretch as much as you think.
How much do you need to invest every month to reach Rs 1 crore in 10 years?
If you want to build a retirement fund of Rs 1 crore in the next 10 years, you would need to invest around Rs 37,200 every month. Increasing this contribution by 5 per cent every year makes the goal more achievable. Assuming an annual return of 12 per cent, your total investment over 10 years would come to about Rs 56 lakh. The returns generated on this amount would be close to Rs 44 lakh, which together would build a corpus of just over Rs 1 crore.
Why Rs 1 crore may not be enough when inflation is considered
On paper, Rs 1 crore sounds like a solid amount. But with average inflation of about 6 per cent every year, the real value of that money falls quickly. For example, if your household spends Rs 50,000 a month today, in 10 years the same lifestyle would cost you close to Rs 90,000 a month.
Now imagine retiring with Rs 1 crore. If that money continues to grow at around 8 per cent annually while you withdraw funds for your monthly expenses, the entire amount could run out within 11 years.
Even if you cut your monthly expenses down to Rs 30,000, the savings might last only about 20 years. This calculation does not include emergencies such as medical bills, healthcare costs, or unexpected family needs, which can make the money run out even faster.
Smart planning is the key to a stress-free retirement
Reaching Rs 1 crore is still a big financial achievement, but relying on that amount alone for retirement may not be practical. The key is to plan realistically, keeping both your lifestyle expenses and inflation in mind. Building wealth steadily during your working years and diversifying your investments can give you a larger cushion.
At the end of the day, retirement is not just about saving a fixed amount; it is about ensuring your savings can keep pace with your life and the rising costs around you.
A team of writers and reporters decodes vast terms of personal finance and making money matters simpler for you. From latest initial public offerings (IPOs) in the market to best investment options, we cover al…Read More
A team of writers and reporters decodes vast terms of personal finance and making money matters simpler for you. From latest initial public offerings (IPOs) in the market to best investment options, we cover al… Read More
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