If you spend ₹1 lakh a month today, guess how much you will need after retirement

When it comes to retirement planning, three key factors really matter: your current age, your target retirement age, and inflation.

Your age tells you how much time you have to save and grow your wealth.

If you spend ₹1 lakh a month today, a 6% inflation rate means your expenses will be much higher by the time you retire say for instance if want to retire at 60.

How future expenses are calculated

So we will consider three individuals: ages 30, 40, and 50, each planning to retire at age 60

The formula is simple: Current expense×(1+inflation rate)years

1,00,000×(1+0.06)30

(1.06)30=5.743

1,00,000×5.743=₹5,74,000

A 30-year-old will need nearly ₹5.74 lakh/month at age 60 to maintain today’s ₹1 lakh lifestyle.

1,00,000×(1+0.06)20

(1.06)20=3.207

1,00,000×3.207=₹3,20,700

A 40-year-old will need about ₹3.21 lakh/month.

1,00,000×(1+0.06)10

(1.06)10=1.791

1,00,000×1.791=₹1,79,100

A 50-year-old will need roughly ₹1.79 lakh/month.

Even a small rise in inflation makes a big difference

If your current monthly expense is ₹1 lakh, the impact of inflation on your future needs can be quite significant. For someone aged 30, planning to retire at 60, monthly expenses could rise to around ₹7.61 lakh with 7% inflation and ₹10.06 lakh with 8% inflation.

A 40-year-old with the same current expense would need approximately ₹3.87 lakh per month at 7% inflation and ₹4.66 lakh at 8% inflation.

For someone who is 50, the monthly requirement at retirement would increase to about ₹1.97 lakh at 7% inflation and ₹2.16 lakh at 8% inflation.

"Apart from household expenses for retirement planning calculation, you also need to account for your health insurance premiums, as they would also rise substantially, and you will not have an option to compromise there.