Retirement estimates: make the assumptions visible

Start with spending

Begin with spending rather than a round corpus target. Separate regular household costs, housing, healthcare, dependants and occasional large expenses. Decide which expenses the retirement portfolio is expected to support and which have another source. A monthly number based on current spending is only the first input.

Allow for inflation

Inflation changes purchasing power. Project current expenses to the retirement date using an explicit inflation assumption, then decide whether different categories need different treatment. Medical expenses, for example, may not move like a broad consumer-price assumption. Keep nominal return and inflation distinct so the model does not present the entire investment return as spendable growth.

Define the planning horizon

Time works in two directions. Years until retirement determine the contribution period; years in retirement determine how long withdrawals may continue. Test a longer life, a delayed contribution or an earlier retirement. A fixed horizon can hide the risk of the corpus needing to last longer.

Test return assumptions

Returns will not arrive as a constant percentage. A simple calculator can show compound-growth arithmetic, but actual markets fluctuate and withdrawals during a fall can affect sustainability. Test lower returns, higher inflation and different withdrawal timing. Include taxes and fees separately if the tool does not model them.

Test your assumptions

Use the result as a range for further planning. Review emergency liquidity, insurance, debt and near-term goals before assigning all savings to a distant target. SEBI’s investor resources emphasise goal-based planning, risk understanding and informed decisions. Product selection or suitability requires a separate appropriately authorised process.