Is Your Retirement Corpus Enough? Understanding Risk, Inflation, and Withdrawal Planning

Retirement planning is no longer about simply reaching a big round number and hoping it will last. Indians are living longer, prices keep changing, and formal pension coverage is still limited. In this environment, saving a certain amount is only the starting point. What matters far more is whether that money can sustain the lifestyle you expect for the years ahead.

Understanding this requires looking at three factors that shape every retirement plan: how long people typically live after 60, how inflation affects the real value of savings, and how withdrawals can be structured so the corpus lasts through retirement. Using recent data from government sources, it becomes easier to see how these elements interact and where a plan may need strengthening.

 Longer lives mean longer retirements

Government data shows that Indians are living significantly longer than in previous generations. According to the Sample Registration System abridged life tables, the remaining life expectancy at age 60 in India is now around 18 years, and over 11 years at age 70.

That means a person who retires at 60 today should be mentally prepared for at least a 20 year retirement, and many will live well into their eighties. For couples, the planning horizon can be even longer, because there is a good chance that at least one partner will live beyond the average.

A longer life is good news, but it also means your corpus has to fund more years of expenses, including healthcare and possible long term care. Underestimating your lifespan is one of the most common ways in which a retirement plan fails.

Inflation, the quiet threat to fixed incomes

Even if your corpus looks large today, inflation slowly erodes its purchasing power. India’s consumer price inflation has been very volatile in recent years. The Ministry of Statistics and Programme Implementation (MOSPI) reports that headline CPI inflation was 6.21 percent in October 2024, then eased to 4.83 percent in April 2024, and further down to 2.82 percent in May 2025.

The message is clear. Inflation may be moderate or even low in some years, but there are periods when food or fuel prices surge. For a retiree who depends heavily on fixed deposits or a pension that does not fully index for inflation, a few high inflation years can permanently damage purchasing power.

If your regular expenses today are 50,000 rupees a month, and inflation averages 5 percent, those same expenses will be around 1,06,000 rupees a month in 15 years. Ignoring inflation leads many people to overestimate how far their corpus will stretch.

You can use a simple percentage increase calculation or a compound interest formula, but it is often easier to plug expected inflation and time horizon into an online tool and see how your required monthly income grows over time.

Growing use of formal retirement schemes, but big gaps remain

On the positive side, more Indians are entering formal retirement saving systems. A keynote speech by the Pension Fund Regulatory and Development Authority (PFRDA) reported that by the end of September 2024, the National Pension System and Atal Pension Yojana together had over 7.8 crore active subscribers, with assets under management of about 13.4 lakh crore rupees.

Similarly, the Employees’ Provident Fund Organisation (EPFO) adds large numbers of new members each month. EPFO data show that around 8.49 lakh new subscribers were enrolled in April 2025, with net member additions of 19.14 lakh that month, and continued strong additions in subsequent months.

These numbers show increasing awareness, but they also highlight how much of the workforce remains outside formal systems. Many self employed, informal sector workers, and small business owners still rely on personal savings, property or family support. For them, testing whether the corpus is enough becomes even more important.

Understanding risk and the role of probability

Retirement planning is really about dealing with uncertainty. Three key risks are particularly important:

1. Longevity risk, the chance that you live longer than expected and exhaust your corpus.

2. Market and return risk, the chance that your investments underperform or suffer a downturn early in retirement.

3. Expense risk, the chance of heavy medical or family related expenses that were not anticipated.

You do not need complex mathematics to think about these uncertainties. A better way to approach the question is to recognise that retirement planning is not about a single number, but about understanding how likely different outcomes are. Instead of asking whether your corpus will last, it is more useful to ask how the answer might change if returns are lower than expected or if an unexpected expense occurs.

This is where a simple probability calculator becomes helpful. It can illustrate how certain events, even if they are not very likely, can still influence the long term balance of your savings. Thinking in terms of likelihood rather than certainty helps retirees see a fuller picture, and prepares them for a range of financial situations rather than a single optimistic scenario.

How to test whether your retirement corpus is enough

You can think of retirement adequacy in three steps.

Step 1: Estimate your annual spending in today’s rupees

Include regular living expenses, health insurance premiums, rent if applicable, basic travel, and modest discretionary spending. It is important to separate essential expenses from lifestyle choices, because in a crisis you can cut the latter.

Step 2: Inflate this spending into the future

Choose a reasonable long term inflation assumption, based on past CPI trends and the current RBI inflation target of around 4 percent. Recent data, with CPI inflation at 2.82 percent in May 2025 and 4.83 percent in April 2024, show that inflation can be both modest and elevated in different periods.

Project what your annual spending might be 10, 20 and 25 years from now. This gives you a sense of the real burden on your corpus later in retirement, when medical costs also tend to rise.

Step 3: Compare your corpus and income streams

List all sources of retirement income, such as EPF, PPF, NPS annuities, government or employer pensions, rental income, and systematic withdrawals from mutual funds or deposits. The question is whether the combination of these sources can support an inflation adjusted spending path without depleting the corpus too early.

Choosing a sustainable withdrawal strategy

This is where withdrawal planning becomes critical. International studies often mention rules like withdrawing 4 percent of the corpus in the first year and adjusting for inflation each year. However, this rule was developed under different market conditions and may not perfectly fit Indian realities.

Instead of a rigid rule, a better approach for Indian retirees is to model different withdrawal rates and see how long the money might last under different return and inflation assumptions. A retirement withdrawal calculator can be very useful here. You can input your corpus, expected rate of return, annual withdrawal amount, and number of years, then see how the balance changes over time.

By running multiple scenarios, for example a conservative return with high inflation, or a moderate return with average inflation, you can get a sense of whether your current withdrawal plan is aggressive, moderate, or conservative. This also helps couples decide whether they should delay retirement, increase contributions in the last few working years, or reduce discretionary spending in early retirement.

A simple framework for Indian savers

Putting everything together, a practical Indian framework for answering “is my corpus enough” would look like this.

1. Use official data on longevity to set a planning horizon. If remaining life expectancy at 60 is about 18 years, consider planning for at least 25 years, to allow for uncertainty and medical advances.

2. Use CPI data from MOSPI to choose an inflation range that feels realistic. For example, you might test your plan at 4 percent and again at 6 percent, reflecting the range of recent inflation outcomes.

3. Convert your current lifestyle into annual spending, separate essentials from luxuries, and project this forward using your chosen inflation assumptions.

4. Add up all formal and informal retirement income sources, including EPFO balances, NPS or APY pensions, and other savings. Government data on the growth of NPS and APY subscribers shows that more people are entering these systems, but each household still has to check its own figures.

5. Use a probability based mindset to think about risks, and try to understand how changes in returns or inflation could affect the likelihood of your corpus lasting.

6. Use retirement withdrawal estimations to test different withdrawal rates and timelines, and adjust your plan until you find a combination that survives even under slightly adverse assumptions.

Final thoughts

There is no single number that guarantees a comfortable retirement for everyone in India. The adequacy of your retirement corpus depends on how long you live, how prices move, how your investments perform, and how much you spend. Government statistics on longevity, inflation, pension coverage and formal savings give a helpful backdrop, but they cannot replace personalised planning.

What you can do is use those official numbers as guardrails, adopt a probability based approach to risk, and run careful withdrawal simulations. With that combination, the question “is my corpus enough” becomes less of a guess and more of an informed, data driven decision.