Retirement Planner

The 4% rule — popularised by the 1998 Trinity Study — says a retiree can safely withdraw 4% of the starting corpus in year one and adjust that rupee amount for inflation each year, with a very high probability of the corpus lasting 30 years. It was derived from US equity-bond return history (1926-1995). The rule is a useful sanity check but is US-centric; for the Indian context, many planners suggest a more conservative 3-3.5% real withdrawal rate because equity returns here are more volatile, headline CPI runs higher than US inflation, and 30-year empirical return data is thinner.

Inflation erodes purchasing power. A ₹50,000/month lifestyle today costs roughly ₹2.87 lakh/month after 30 years at 6% inflation — about 5.7x. What actually matters for retirement maths is the real return (post-retirement return minus inflation), calculated via the Fisher equation: real = (1 + nominal) / (1 + inflation) − 1. If your corpus earns 8% nominally and inflation is 6%, your real return is only about 1.89%. That tiny gap between nominal return and inflation is the engine that decides whether your corpus lasts — and why being too optimistic on returns or too low on inflation is the single most dangerous retirement-planning mistake.

Usually not — unless you retire late or have very low monthly expenses. At 6% inflation and a 3.5% real withdrawal rate, ₹1 crore sustains roughly ₹29,000/month of inflation-adjusted spending for 25 years — equivalent to about ₹5,000-6,000/month in today's purchasing power if you retire 25-30 years from now. ₹1 crore is a great mid-career milestone, but for someone aged 30-40 today, a corpus in the ₹5-10 crore range is usually closer to the real target — driven entirely by inflation compounding over decades, not by lifestyle inflation. The remedy is starting early and letting compounding do the heavy lifting.

A common rule of thumb is 'equity allocation = 100 − your age', meaning a 30-year-old holds about 70% equity and a 60-year-old about 40% equity. Equity has historically earned 11-13% annualised over 20+ year windows but is volatile year-to-year. Debt instruments (PPF, EPF, government bonds, debt mutual funds) earn 6-8% with low volatility. The pre-retirement phase rewards equity weighting — you have decades for short-term volatility to wash out. The post-retirement phase rewards a debt-heavier mix because you can no longer afford a −30% year early in retirement (sequence-of-returns risk). A glide path that shifts equity down by 1-2% per year from age 45 to retirement is a sensible default; talk to a SEBI-registered planner before locking it in.