Step one: inflate today's expense to retirement
For a ₹50,000 monthly expense today, 25 years from retirement, at 6% annual inflation: ₹50,000 compounds up to ₹2,14,593.54 a month by the time retirement arrives — more than four times today's figure, purely from inflation compounding over 25 years.
Step two: size a corpus that sustains that expense
Using the real rate of return (7% expected post-retirement return net of 6% inflation) and a 25-year retirement, the corpus needed to sustain ₹2,14,593.54 a month throughout retirement is ₹5,71,11,047.49.
Why the real rate of return, not the nominal rate
Using the real rate (return net of inflation) automatically keeps the monthly withdrawal's purchasing power constant throughout retirement — the corpus sizing accounts for inflation eating into returns every year of retirement, not just the years leading up to it.
Why this figure looks so much larger than a simple savings target
₹5.71 crore can look intimidating next to a ₹50,000 monthly budget, but it reflects both a quadrupled future expense and a 25-year sustaining period — a very different calculation from simply saving up a lump sum equal to a few years of today's expenses. Comparing this figure against a realistic savings projection is exactly what the companion article on closing the retirement corpus gap does next.