HaatBeatBeyond the numbers
The maths shows one side. These are the things only you can weigh.
- Time and healthThe years just after retiring are often the most active. For many people that time is worth more than a larger cushion later.
- Work that gives meaningSome people enjoy their work and the people around them. Working a few more years can be a choice, not a burden.
- A softer landingPart-time work, consulting or a gradual step back can bridge the gap between the two ages.
- Family and health costsChildren's education, ageing parents and medical costs can change the picture. Leave room for them.
- Living with uncertaintyMarkets, inflation and lifespans are hard to predict. A margin of safety turns a plan that just works into one that holds up.
How it's calculated
This uses exactly the same method as the retirement calculator, once for each age. The saving needed is found by search: the smallest whole monthly amount for which the money never runs short before the planning age.
Assumptions
- Constant returns before and during retirement, and constant inflation.
- Saving at the start of each month until retirement; spending rises with inflation from today.
- No pension, rental or other income in retirement; fees and taxes are not included.
Worked example
Aged 35 with 10 lakh rupees saved and saving 20,000 rupees a month at 10% before retirement, 7% after and 6% inflation, wanting 50,000 rupees a month in today's money: retiring at 55 needs about 54,199 rupees a month to last to 85, and retiring at 60 about 32,815 rupees, so retiring five years earlier needs about 21,384 rupees a month more.
Questions
Why does a few years make such a big difference?
Retiring earlier removes years of saving and growth, and adds years of spending at higher, inflated prices. Both work against you at once.
What if the money runs short?
The comparison shows when. Options include saving more, retiring a little later, spending less in retirement or adding other income.
Does it include a pension?
No. If you expect a pension or other income, lower the monthly spending to the part your savings must cover.
Which returns should I use?
Use cautious, long-term assumptions, usually lower after retirement when money is often kept safer.