Retirement Planning Calculator: Monthly SIP Goal
Determine the monthly SIP (Systematic Investment Plan) needed to reach your financial independence goal.
Your Retirement Goal Inputs
Example: ₹5 Crore. This amount should be the future value, adjusted for inflation.
The average rate of return expected from your long-term portfolio.
Required Monthly Investment (SIP)
—
₹ (Per Month)
Investment Breakdown
| Projected Final Value: | — |
|---|---|
| Total Amount You Will Invest: | — |
| Gap / Surplus: | — |
Understanding the Retirement Planning Calculator Logic
This Retirement Planning Calculator helps you solve one of the most critical questions in financial freedom: *What must I save monthly to hit my corpus goal?* It performs a reverse calculation on the future value of an annuity, determining the required periodic payment (your SIP) necessary to bridge the gap between your desired retirement corpus and the expected future value of your current savings.
A core component of responsible retirement planning is accounting for the power of compounding and the eroding effect of inflation. By providing inputs for your current savings, target corpus, expected annual return, and time horizon, this tool provides a clear, actionable monthly savings figure. This figure represents the commitment needed, assuming you maintain the specified rate of return until retirement. It’s crucial to review and adjust these inputs annually based on market performance and life changes.
Required Monthly SIP Formula
The required monthly investment ($P_{\text{SIP}}$) is calculated in two stages: first, projecting the growth of your existing savings, and second, determining the annuity (SIP) needed to cover the remaining balance.
$$\text{Future Value Needed from SIP} = \text{Goal Corpus} – \text{Current Savings} \cdot (1 + r)^t$$ $$\text{Required Monthly SIP} = \frac{\text{Future Value Needed} \cdot i}{ (1 + i)^n – 1}$$ Where $r$ is the annual rate (decimal), $t$ is years, $i$ is the monthly rate, and $n$ is the total number of months.
A Note on Inflation and Real Returns
How should I incorporate inflation in this Retirement Planning Calculator?
We assume that the Goal Corpus you enter (e.g., $₹5 \text{ Crore}$) has *already* been adjusted for inflation. For instance, if you need $₹1 \text{ Crore}$ in today’s money and expect $5\%$ inflation over $25$ years, your actual goal corpus should be $\text{₹}1 \text{ Crore} \cdot (1 + 0.05)^{25} \approx ₹3.38 \text{ Crore}$. Additionally, the Expected Annual Return Rate should ideally be your *real* return rate: $\text{Nominal Return Rate} – \text{Inflation Rate}$. Using a real return rate ensures the calculated SIP provides the required purchasing power at retirement.
https://quickcalculators.in/return-on-investment-roi-calculator/