Retirement planning: Here's how much corpus a 27-years-old couple, living in Mumbai, will require by 60 years

Assessing your current finances, potential growth, overall risk profile and future goals is the key to forming a smart financial plan. Here, long-term stability and meeting your financial targets demands focused investments to build wealth and a sufficient retirement corpus.

We asked experts what how a young, married couple (both 27) earning combined ₹27 lakh per annum in Mumbai, can make their investments work to afford a house in the city, bring up two children, and retire by 60 years. Given the increasing cost-of-living, medical and lifestyle inflation, how much corpus do they require?

According to Apurv Gupta, Co-Founder and CEO of Wealth Beacon, social media buzz over ₹20-100 crore retirement corpus for most Indians is “an exponentially inflated number”, which simply assumes that living expenses will ballon because of inflation and does not account for lifestyle. He believes that a more achievable target is ₹19 crore.

“This is achievable with a starting SIP of ₹16,500 per month, stepped up at 8% per annum. Once the house EMI is finished, the contribution to investments will increase. Any windfall — e.g., bonus, RSUs, retirals can help them retire earlier than 63,” he added.

Further, he noted that if the couple can cut back on expenses and increase their investments by just 10% to ₹55,000 per month, they'll be able to retire at 60. “This shows the power of even small savings increase early on and how proper financial advice can help,” Gupta added.

Would a retirement corpus of ₹3 crore suffice?

According to Chartered Accountant (CA) Chandni Anandan, Tax expert at ClearTax, a retirement corpus of approximately ₹3 crore in today’s value terms can be considered sufficient for a structured retirement plan for a senior citizen couple, based on long-term financial projections. She presented an evaluated model (see below), where the total accumulated corpus is approximately ₹4.92 crore in today’s purchasing power terms after adjusting for inflation over a 33-year horizon.

“After accounting for a residential property purchase of ₹2.5 crore, the remaining investable corpus stands at approximately ₹2.42 crore. At an assumed conservative return of around 7% per annum, this corpus generates an estimated monthly income of approximately ₹1.42 lakh, which is sufficient to cover regular living expenses, healthcare costs, and a moderate lifestyle,” according to Anand.

She however cautioned, “sufficiency is conditional on stable inflation trends, sustained investment returns, and absence of extreme healthcare contingencies. Therefore, while ₹3 crore is broadly adequate for retirement planning, it is not fully risk-proof under all scenarios.”

How should it be invested for optimal returns and tax-savings?

Investing in stable instruments typically provides more predictable and reliable returns, whereas aggressive investment strategies can increase or decrease returns depending on market conditions and timing, according to Anand. “Therefore, proper awareness, risk understanding, and financial literacy before making investment decisions is highly recommended,” she added.

CA Anand in her calculation model assumes net savings of ₹13,04,500 annually, savings growth rate of 6% per annum, investment return of 8% per annum, and an accumulation period of 33 years.

“Based on these assumptions, the total accumulated corpus before adjustments is approximately ₹33.7 crore in nominal terms, which reduces to approximately ₹4.92 crore after inflation adjustment at 6% over 33 years. A balanced approach combining stability-oriented instruments and market-linked instruments is implied within this framework to manage both income stability and long-term inflation protection,” she added.

Gupta noted that savings should be invested in an equity heavy portfolio via SIPs. “This is because most of the goals are far away — the nearest being house downpayment”. His company's artificial intelligence tool Otto uses a proprietary asset allocation model called HA3 - Horizon Adjusted Asset Allocation. This means that the asset allocation will change over time — SIPs near retirement will be debt heavy.

He added, “if the couple have retiral benefit from the company, our recommendation is to invest ₹50,000 p.a. in NPS to get full benefits of section 80(CCD(2)) under the new tax regime. This should be ₹50,000 p.a. as Employer Contribution.”

The suggested asset allocation from Wealth Beacon is 88% equity, 2% arbitrage, 10% gold. Here, the Equity portfolio should be small and midcap focused. The suggested mix is: 50% large cap, 35% midcap, 15% small cap.

What are the key considerations?

Gupta said key assumptions when calculating are inflation at 6%, pre-retirement returns (tax adjusted) at 10%, post-retirement returns (tax adjusted) at 9%, annual wage / income increase at 8%, rent at ₹50,000 per month, living expenses of ₹1.25 lakh/month, investment of ₹50,000/month, age of kids at 3 year and 1 year, life expectancy of 85 years, and reduction in expenses post-retirement at 10%.

The tool has assumed the following goals:

• House Purchase in 10 years. 30% downpayment, EMI for 20 years at 8%. Current value of house: 1Cr [ Roughly 4 times the annual salary]
• Higher education of Children [2L/year fee for a 4-year program, in present value terms.
• Marriage of Children [25L per child]
• Retirement Corpus.

Here's a breakdown of Anand's calculations for the couple:

Disclaimer: This story is for educational purposes only. The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.