Do not be scared by what you need to accumulate for retirement!

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We had discussed Why the retirement corpus we need is so large in an earlier post. Using a retirement calculator for the first time can be a nightmarish experience. Many users have complained that the low-stress retirement calculator is low-stress before using it and high-stress after!

I would like to think much of this stress is due to a lack of understanding of how a corpus grows over time.  Although investments in volatile asset classes do not compound like a fixed deposit, their growth can be represented as such. As long as we understand that the return assumed is the average considered over the period of investment, and not the one obtained each year, it should be okay.

Suppose my retirement is 25 years away and my target corpus is 15 Crore. This is not the number I should be scared of. For an average portfolio return of  10%, the monthly investment  I need to make is Rs. 46,148 in the first year and increasing at 10% each year.

If I can manage to invest this much – initially and also manage the increase of 10% a year, I see no reason to be scared or worried. If I cannot, then I will need to review the inputs. Remember, any calculator is only as good as its inputs.

This the standard compounding graph for the scenario mentioned. Notice how small the total investment is, compared to the corpus achieved. So much of the corpus is via the growth of the initial investments. 

Now for the key graph. This is the percentage of the target corpus (15 Cr) achieved vs the no of years invested.


Notice that it takes 20 out of 25 years (80%) to achieve 50% of the target corpus. The remaining 50% (7.5 Cr) comes in the next 5 years!!

So the key is to

  • start investing early
  • invest as much as possible
  • invest with a risk management strategy
  • invest without worrying about the target

If we invest with discipline and a plan, we will get there. Use  the low-stress retirement calculator without fear or stress. You can also use the android versions linked below.

Moral: Growth of a corpus is a non-linear process. It cannot be imagined. So do not try to and get stressed after using a retirement calculator!

Related post: How people react to a retirement planning calculation


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About the Author M Pattabiraman author of freefincal.comM. Pattabiraman(PhD) is the author and owner of  He is an associate professor at the Indian Institute of Technology, Madras since Aug 2006. Pattu” as he is popularly known, has co-authored two print-books, You can be rich too with goal based investing (CNBC TV18) and Gamechanger and seven other free e-books on various topics of money management.  He is a patron and co-founder of “Fee-only India” an organisation to promote unbiased, commission-free investment advice. Pattu publishes unbiased, promotion-free research, analysis and holistic money management advice. Freefincal serves more than one million readers a year (2.5 million page views) with numbers based analysis on topical issues and has more than a 100 free calculators on different aspects of insurance and investment analysis. He conducts free money management sessions for corporates  and associations(see details below). Previous engagements include World Bank, RBI, BHEL, Asian Paints, TamilNadu Investors Association etc. Contact information: freefincal {at} Gmail {dot} com (sponsored posts or paid collaborations will not be entertained)
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  1. Timely article. Last weekend had a intense discussion with my uncle (54 years old) about his retirement needs and the there was literally panic, disappointment.

  2. Timely article. Last weekend had a intense discussion with my uncle (54 years old) about his retirement needs and the there was literally panic and mixed feelings of sadness, disappointment. Have decided to start a SIP of Rs.10k before this Friday, in equity MF and increase it later in a month after more thorough data. Will be helping him with your calculators. Thanks.

  3. For retirement, Is it a good idea to invest in property and earn rental income. If you have already discussed this in a previous post do share that link.

  4. If he has only 6 years till retirement, you might be doing him more harm than good by starting a SIP now. There is no guarantee how equity will perform over such a short term. Your uncle is already in a panic state and if market doesn’t perform as expected, his heartbeat will go through the roof.

  5. If property investment is not desireable then, are Equity and Debt MF the only options for investment ? If that’s the case then would Equity and Debt MF be sufficient to sustain through the remainder life period. I’m expecting to retire in another 19-20 years @ 60 years and continue to live through till 90 years.

  6. Yes, The amount allocated to be invested in equity MF is done with this mindset: 20+ years; it is not going to be come back / donating it / gone (It is a bit extreme but anyways to simulate this mentality and it kinda …works) :

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