SIP and One-time Investment for Retirement Planning: One needs money for their daily expenses at every stage—whether they are working or in their retirement stage. But when they approach retirement, there are chances that their sources of income may deplete. At the retirement age, they may not have income sources at all. In such times, returns from their retirement corpus may help them a great deal. Investment that was made during their working years through their hard-earned money can make their investment journey smooth. They may make investments as per their earning cycle. The investment can be daily, monthly, sporadic, or one-time. The end result is to create a corpus to live a comfortable life. Know why having a retirement corpus is necessary, how one may create it, and what may be the monthly and one-time investment for a 30, 35, 40, or 45-year-old to get a Rs 65,000 monthly income for 20 years.

Why retirement corpus is a necessity 

For people who don’t have a regular source of income such as rented property or a pension, having a retirement corpus is necessary. It can make them financially free, where they don’t have to depend on others for daily expenses.

How one can create retirement corpus

A person can start investing in market- and non-market-linked investment schemes. While non-market-linked schemes can provide them stability, market-linked schemes can provide them growth. But whatever they choose, they need to have a long-term investment horizon.

Why should retirement corpus be long-term plan?

A long period provides sufficient time for one’s investment to grow. An early beginner gets more years for their investments to grow compared to a person who is starting late. Let’s see an example to understand it precisely.

Rs 5 crore retirement corpus target

If A and B want to create a retirement corpus of Rs 5 crore each. A can invest Rs 10,000 a month, and B can invest Rs 40,000 a month. Both expect a 12 per cent annualised return. Let’s see in how many years they can achieve the target.

At a Rs 10,000 monthly investment, A can achieve the target in approximately 35 years, where their investment will be Rs 4,200,000 and the estimated corpus will be Rs 5,510,8311.

On the other hand, A can achieve the target in 23 years, where their investment will be Rs 1,10,40,000, and the estimated corpus will be Rs 5,34,16,505.

We can see that A can achieve a higher target with nearly one-third of the investment by taking 12 years more compared to B.

This shows that if one starts early, they can achieve a larger corpus in a smaller amount compared to a late beginner.

Calculation for the story

We will calculate how much monthly and one-time investments a 30, 35, 40, or 45-year-old person needs to get Rs 65,000 monthly income at 60 for 20 years in a row.

Pre-retirement investment return will be 12 per cent, while post-retirement will be 6 per cent. Inflation will be 6 per cent. We are assuming 0 retirement at the current stage in each case. 

For 30-year-old: Corpus required at retirement
Monthly expenses at 60 (at 6% inflation)-Rs 3,73,327
Estimated retirement corpus amount- Rs 8,95,98,480

For 30-year-old: One, Monthly SIP investment required
Estimated monthly SIP amount- Rs 25,383
Estimated one-time investment amount- Rs 29,90,612

For 35-year-old: Corpus required at retirement

Monthly expenses at 60 (at 6% inflation)-Rs 2,78,972
Estimated retirement corpus amount- Rs 6,69,53,280

For 35-year-old: One, Monthly SIP investment required
Estimated monthly SIP amount- Rs 35,282
Estimated one-time investment amount- Rs 39,38,414

For 40-year-old: Corpus required at retirement
Monthly expenses at 60 (at 6% inflation)-Rs 2,08,464
Estimated retirement corpus amount- Rs 5,00,31,360

For 40-year-old: One, Monthly SIP investment required
Estimated monthly SIP amount- Rs 50,074
Estimated one-time investment amount- Rs 51,86,590

For 45-year-old: Corpus required at retirement
Monthly expenses at 60 (at 6% inflation)-Rs 1,55,776
Estimated retirement corpus amount- Rs 3,73,86,240

For 45-year-old: One, Monthly SIP investment required
Estimated monthly SIP amount- Rs 74,094
Estimated one-time investment amount- Rs 68,30,327