How to build Retirement Corpus of Rs 5 crore - in 15, 20, 25, 30 & 35 years?

You want to retire with Rs 5 crore in India. That’s a good solid goal to have in 2023.

Till the 2000s, there was a common belief that Rs 1 crore would be enough to retire comfortably. But with inflation and growing lifestyle requirements, many are aiming for Rs 5 crore for their retirement corpus.

So how can you have Rs 5 crore in retirement?

How much do you need to invest monthly to get Rs 5 crore retirement corpus?

The answer depends on:

the number of years available, and
the % returns your investment generates

So let’s answer the question How to save Rs 5 crore for Retirement – by changing the two variables mentioned above. We evaluate for time periods 15, 20, 25, 30, 35 years and we calculate for returns 6%, 8%, 10%, 12% and 14%.

Given the investment horizon of 15-30 years, the best asset to invest in is equity. Atleast a major portion should be in equities. Equity can be expected to deliver 10-12% average returns in the long run (check the historical Nifty returns data). If you are a conservative investor, you will have a smaller equity allocation and hence, comparatively lower portfolio returns.

So let’s see…

How much to invest for Rs 5 crore retirement in 15 years?

For Rs 5 crore retirement in 15 years, you need a monthly SIP of Rs 1.68-1.69 lakh if earning 6% returns.
For Rs 5 crore retirement in 15 years, you need a monthly SIP of Rs 1.42-1.43 lakh if earning 8% returns.
For Rs 5 crore retirement in 15 years, you need a monthly SIP of Rs 1.19-1.20 lakh if earning 10% returns.
For Rs 5 crore retirement in 15 years, you need a monthly SIP of Rs 0.99-1.00 lakh if earning 12% returns.
For Rs 5 crore retirement in 15 years, you need a monthly SIP of Rs 83-84,000 if earning 14% returns.

That’s how much you need to invest every month to get Rs 5 crore in 15 years for your retirement. You might have already noticed, higher the return expectations, the lower the required monthly investment.

Please note that due to LTCG tax on equity investments, the actual amount that you need to invest will be slightly higher.

And what about other time periods like 20, 25, 30 and 35 years?

Here are the answers:

How much to invest for Rs 5 crore retirement in 20 years?

For Rs 5 crore retirement in 20 years, you need a monthly SIP of Rs 1.06-1.07 lakh if earning 6% returns.
For Rs 5 crore retirement in 20 years, you need a monthly SIP of Rs 84-85,000 if earning 8% returns.
For Rs 5 crore retirement in 20 years, you need a monthly SIP of Rs 66-67,000 if earning 10% returns.
For Rs 5 crore retirement in 20 years, you need a monthly SIP of Rs 51-52,000 if earning 12% returns.
For Rs 5 crore retirement in 20 years, you need a monthly SIP of Rs 40-41,000 if earning 14% returns.

How much to invest for Rs 5 crore retirement in 25 years?

For Rs 5 crore retirement in 25 years, you need a monthly SIP of Rs 71-72,000 if earning 6% returns.
For Rs 5 crore retirement in 25 years, you need a monthly SIP of Rs 52-53,000 if earning 8% returns.
For Rs 5 crore retirement in 25 years, you need a monthly SIP of Rs 38-39,000 if earning 10% returns.
For Rs 5 crore retirement in 25 years, you need a monthly SIP of Rs 27-28,000 if earning 12% returns.
For Rs 5 crore retirement in 25 years, you need a monthly SIP of Rs 20-21,000 if earning 14% returns.

How much to invest for Rs 5 crore retirement in 30 years?

For Rs 5 crore retirement in 30 years, you need a monthly SIP of Rs 49-50,000 if earning 6% returns.
For Rs 5 crore retirement in 30 years, you need a monthly SIP of Rs 34-35,000 if earning 8% returns.
For Rs 5 crore retirement in 30 years, you need a monthly SIP of Rs 23-24,000 if earning 10% returns.
For Rs 5 crore retirement in 30 years, you need a monthly SIP of Rs 15-16,000 if earning 12% returns.
For Rs 5 crore retirement in 30 years, you need a monthly SIP of Rs 10-11,000 if earning 14% returns.

How much to invest for Rs 5 crore retirement in 35 years?

For Rs 5 crore retirement in 35 years, you need a monthly SIP of Rs 35-36,000 if earning 6% returns.
For Rs 5 crore retirement in 35 years, you need a monthly SIP of Rs 22-23,000 if earning 8% returns.
For Rs 5 crore retirement in 35 years, you need a monthly SIP of Rs 13-14,000 if earning 10% returns.
For Rs 5 crore retirement in 35 years, you need a monthly SIP of Rs 8-9000 if earning 12% returns.
For Rs 5 crore retirement in 35 years, you need a monthly SIP of Rs 5-6000 if earning 14% returns.

You already know the benefits of SIP investing. So these are the answers to questions like How much SIP is needed to accumulate Rs 5 crore in 15 years? How much SIP is needed to accumulate Rs 5 crore in 20 years? How much SIP needed to accumulate Rs 5 crore in 25 years? How much SIP needed to accumulate Rs 5 crore in 30 years? How much SIP is needed to accumulate Rs 5 crore in 35 years?

By the way, we assumed constant annual average returns in the calculations. In reality, markets don’t move in a straight line and returns can fluctuate every year. On that note, do read an interesting article about how a 6-ft tall person drowned in river of 5-ft average depth!

As you see, the trend is clear from the above calculations:

The earlier you start, the longer the investment period you will have, and the lesser you will have to invest. Here is another super proof.
The more returns you generate, the lesser you will have to invest.

So if you are young and have not yet started investing for retirement, you should do it as soon as you can. It will help you accumulate a larger corpus or if you know the secret of financial freedom, then you can even retire early.

Many people believe that if they start late (for any reason whatsoever), they can still generate high returns and compensate for the late start. But that is easier said than done.

The problem with high return expectations is that it is seldom met. So even if some equity funds have managed to deliver a good 18-20% returns in the past (and even 50-100% in a year!), it is difficult to predict what returns these funds (or any other equity fund) will give over the next 15-35 years. So by keeping our expectations low, the chances of ending up with less than Rs 5 crore are further reduced. That said, it is advisable to have reasonable expectations when investing in equity.

And what is this reasonable expectation from long-term equity investing?

As of now, keep it at 10-12% post-tax returns.

So to achieve your goal of Rs 5 crore at retirement:

In 15 years, you need to invest Rs 1-1.2 lakh per month
In 20 years, you need to invest Rs 51-67,000 per month
In 25 years, you need to invest Rs 27-39,000 per month
In 30 years, you need to invest Rs 15-24,000 per month
In 35 years, you need to invest Rs 8-14,000 per month

These are the required SIP for Rs 5 crore and the exact amount you need to invest every month to become a SIP crorepati and have Rs 5 crore in retirement. Why focus on regular investing via SIP and not go for lumpsum investing? Because first of all, most small investors generally do not have surplus lumpsum with them. And second, because investing small amounts monthly via SIP in equity mutual funds is the best bet.

And once you decide to go ahead with this approach to invest regularly, just stick with it. It works. Also, keep monitoring your mutual fund portfolio closely. There will be times when returns won’t be acceptable. That’s fine. There will be good days and there will be bad days. But what’s important is for you to stick around.

Also, picking the right mutual funds is very important. If you can do fund selection properly without being influenced by the wrong people or by wrongly relying on fund star ratings, then it is fine. But if you are not sure about the right funds, then consider taking some genuine help:

That was about saving Rs 5 crore for retirement. But what if you are aiming for a smaller amount? Let’s say Rs 1 crore? I would suggest you first see why Rs 1 crore is not enough for retirement. And if you are still not convinced, then check how to save Rs 1 crore to know the investment requirement. You can also read this detailed post on How to save Rs 1 crore using PPF or saving Rs 1 crore using tax-saving ELSS funds.

Coming back to our Rs 5 crore discussion.

Most people have other financial goals as well and cannot invest a very big amount every month to save Rs 5 crore for retirement?

If that’s the case, then how do we get around that?

The answer lies in the scenario of Increasing SIP – Starting out with a much smaller SIP amount, investors can slowly increase monthly investments (as per their increasing income and comfort level) to achieve Rs 5 crore at a much comfortable pace.

Here is what I am trying to say. You start small and invest more and more with each passing year.

Suppose your investment delivers 10% average returns and you have 25 years time horizon. For regular non-increasing SIP, you need to invest Rs 38-39,000 per month for 25 years.

But what if you can’t start with Rs 38-39,000 per month. And what if as your income increases over the years, you to can slowly increase your monthly SIP by 5% every year?

How will that change the SIP amount then?

So, in the first year, you will have a SIP of Rs 25-26,000 per month instead of Rs 38-39,000 for the fixed non-increasing SIP. In the second year, the Rs 25-26,000 SIP will have to be increased by 5%, i.e. to about Rs 1250-1300 and so on every year till the 25^th year.

To summarize, if your investments earn a 10% return and you have 25 years to save Rs 5 crore, you can take either of two options:

Invest Rs 38-39,000 every month continuously for 25 years via regular SIP
Start investing Rs 25-26,000 every month in the first year and increase this monthly SIP amount by 5% every year

Can I reach Rs 5 Crore faster?

Yes (greedy!) you can.

It is possible if you do any or all of the following 3 things:

Invest higher amounts in SIP
Invest early and as soon as possible
Invest and hope that the choice of your mutual fund schemes is such that it delivers higher than average returns we assumed

And if you just wish to know how much money you can save up by investing a fixed amount in SIP every month, then you can use the links below:

And one important thing that you shouldn’t forget.

Is Rs 5 crore enough for retirement planning? The value of 5 crores after 20-30 years will not be the same as today. And that is obviously due to inflation. The value of money does not stay the same forever.

To give you some perspective, here is the value of Rs 5 crore after 20 years of different inflation:

At 4% inflation – Value of Rs 5 crore today will be Rs 2.29 Crore
At 6% inflation – Value of Rs 5 crore today will be Rs 1.55 Crore
At 8% inflation – Value of Rs 5 crore today will be just Rs 1.07 Crore

So just being a crorepati in the future won’t be enough. Inflation can screw up retirement planning if you are not careful.

When it comes to investing, it is best to focus on your financial goals and do Goal-based Financial Planning. Just randomly aiming for some figure like Rs 5 crore in 20 years or Rs 5 crore in 30 years or SIP for Rs 5 crore may not help. That’s because you never know whether Rs 5 crore would be sufficient for all your goals or retirement or not. And this problem is solved easily if a goal-based investing approach is taken.

To get yourself a well-thought-through detailed goal-oriented financial plan, that plans for all important life goals like children’s education, your retirement, house purchase, traveling, etc., you can consider taking professional Stable Financial Planning Service. If you are interested, then head to this page for more details about the Financial Planning Service. You will increase the probability of achieving your goals on time without stress.

Creating a Rs 5 crore retirement corpus requires a lot of financial discipline and investment planning during the early phase of your life. Also, make sure to step up your SIP by 5-10% every year in line with the increase in your income.

Further readings related to Retirement Planning:

I regularly get queries like Can I create Rs 5 crore retirement corpus by investing Rs 20,000 per month? OR Can I create a Rs 5 crore retirement corpus by investing Rs 30,000 per month? OR Can I create a Rs 5 crore retirement corpus by investing Rs 40,000 per month? OR Can I create a Rs 5 crore retirement corpus by investing Rs 50,000 per month? I hope that if you too had such questions, now you have some answers to think about.

So that is all about how to save up to Rs 5 Crore for your Retirement and that was your Rs 5 crore mutual fund SIP calculator.

I hope you now have the answer to How much monthly SIP is needed to accumulate Rs 5 crore for retirement in India (2023).