How people react to a retirement planning calculation

Published: June 1, 2015 at 3:13 pm

Last Updated on

Here is how people react when they use a retirement calculator for the first time.


Most online calculators do not allow you to increase the investment amount each year. So I made one for myself and punched in the numbers. The results scared the living daylights out of me. I sent the sheet to Subra and asked him if my assumptions (inputs) were reasonable. He said they were.

That meant I had to invest each month as much as the calculator said I should. Fear is a great motivator for me. Initially, I could not invest as much, but after a year or two I could overtake my investment schedule.

I invest out of fear.  I do not want to depend on others financially when I retire. If I require physical help from others, I better have enough money. It is stupid to expect emotional support. That boils down to luck.

Disbelief: Something is wrong. It can’t be true!

Many react this way.  They blame the mathematics and search for a calculator which neglects inflation after retirement. They decrease inflation, increase returns, assume expenses will be much lower in retirement. Anything to get a nice and friendly “monthly investment required”.


Few have lost sleep after using my calculators. Often for days.  Typically these are people close to, or in theirs 40s. Late wake-up calls can be traumatic. There is only one thing to do: invest like our ass is on fire.

Fear of Inflation is a sales conspiracy!

Yes, you read that right. There are many who believe that inflation is nothing to worry about and insurers and AMCs use that to sell products out of fear.

I am willing to believe that the moon landings were faked, but to say that inflation is not a concern when prices double every few years is dumb.


My parents generation did well with a pension. So can I.

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That is a fallacy. Our parents generation or the one before that did not have pension that was enough to combat inflation. They ‘managed’ by quietly and gradually adapting: changing their lifestyle, reducing expenses etc.

They also lived in a joint family and had multiple children who gave them a bit chunk of their salaries to handle the household’s expenses. While they must have felt the pinch personally, it gave us the impression that everything was fine.


It is obvious that times have changed and if a constant pension is all that we are going to get, we better pray a swift and speedy death.



Take your retirement seriously. I would suggest that one should invest each month as much as they spend, but that would be dismissed as impractical.

So let me try this: For every year in employment try to accumulate one year of financial independence ( ability to generate inflation-protected income)


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  1. You missed one: all of the above!

    I’m really glad to have looked at it when I still, I think, have compounding on my side!

  2. And then there’s the final category like me who are elated that the required number is negative. I don’t take the whole credit for this pleasant situation though, it’s my moms prudence in investing in some quality shares since and holding it over 35yrs. The dividend income itself is now pretty good and more importantly completely tax free!
    (However if you want to leave something for future generations with such peace of mind, the only bet is an ETF).

  3. Pattu Sir,

    In your retirement calculators, while entering my EPF contribution, should I also include EPF Employer Contribution and Pension contribution part also?

    Please confirm?

    1. I think it is best to only include the contribution that adds up to the lump sum you get in hand. The part that goes towards pension contribution and the actual pension can be neglected as they are small.

  4. Dear,
    How to plan for NRIs? I mean taxation and investment options both parts are different in case of NRI. I have also gone through now your inflation protected retirement income generation post.
    Sorry to say but i am raising my query again.
    I want to know at 60 what will be required amount to accumulate for retirement if i am currently 35 yr.
    if i want to accumulate max in next 5 yr and let it grow till 60 , how much i have to invest till next 5 yr per month.

    This i tried but become little confusing for me. ( poor maths 🙂 ). Can you please provide calculators for kind of calculation for for DIY planning.

    Thanks and am refreshing knowledge by reading your blogs for equity funds selection blogs.


    1. Even I would like to know such calculation. If one can max out say 60-70L lumpsum in next 5 years & do not work henceforth. How would to do the calculations.

    2. Doing a back of envelop calculation for you.
      Your current age = 35 years
      Your expected draw-down age = 60 years
      Duration = 25 years

      Let’s say you put the money in diversified equity funds and the likely returns will be 12% per annum (This is a crucial number, but 12% return on diversified equity funds is not greatly exaggerated).

      To have 5 crores INR at the end of 60 years, what you might need to invest in next 5 years.

      For 2015
      A. At 12% per annum, returns after 25 years = (1.12) ^ 25 = 17.
      That means, if you need 1 crore rupees after 25 years, you need to invest 1 crore/17 = 5.88 lakhs this year (2015).

      For 2016
      B. At 12% per annum, returns after 24 years = (1.12) ^ 24 = 15.
      That means, if you need 1 crore rupees after 25 years, you need to invest 1 crore/15 = 6.58 lakhs in 2016.

      On similar notes,
      For 2017
      7.38 lakhs

      For 2018
      8.26 lakhs

      and For 2019,
      9.25 lakhs

      So, if you invest, approx 7 lakhs every year for next 5 years, you are likely to have 5 crores when you turn 60 years.

      Please note that 5 crores when you turn 60 might not be sufficient for a comfortable living. In retrospect, it is same as having 30 lakhs today. If this 30 lakhs today tides you over 6-8 years, 5 crores will help for 6-8 years when you turn 60 unless you considerably downgrade your lifestyle.

      1. Thanks for the time you spend for valuable reply. atleast i get rough idea about next 5 yrs and yep i may consider to put aside minimum such amount.

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