Definition
Retirement Corpus
A retirement corpus is the total lump sum you need to have accumulated by retirement to fund your living expenses for the rest of your life.
It is estimated by projecting your annual expenses at retirement (inflated to that date), deciding how many years they must last (accounting for longevity risk), and applying a sustainable withdrawal assumption such as the 4% rule. Because Indian retirees often lack pensions and face medical inflation, the corpus must be large enough to outlast a long retirement.
Factors that swing the number include current age, expected lifespan, inflation, post-retirement returns and any pensions or rental income. Building it typically combines EPF, PPF, NPS and equity mutual funds, with a step-up SIP to keep pace as income grows. Recalculating every few years keeps the target realistic.
Related terms
- The 4% RuleThe 4% rule is a retirement guideline suggesting you can withdraw about 4% of your portfolio in the first year and adjust that amount for inflation thereafter, with a reasonable chance it lasts roughly 30 years.
- Longevity RiskLongevity risk is the risk of outliving your savings — that you live longer than your retirement corpus was designed to support.
- Step-up SIPA step-up SIP automatically increases your periodic investment amount at set intervals, aligning contributions with rising income and accelerating wealth accumulation.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.