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What percentage of my salary should go towards retirement?


10 Sep 2021 - Contact Sayan Sircar
29 mins read

This post answers a common question asked by investors regarding investing for retirement.

What percentage of my salary should go towards retirement?

A common question for investors is the percentage of their monthly income they need to save for retirement. The in the US, a common thumb-rule is minimum 15% but that has a lot of assumptions that may not be applicable to Indian investors like retirement age, longevity, healthcare expenses and state pension.

15% rule for retirement investment

If you have never used a goal-based investing calculator, which gives you the exact figure, this post will show you a quick way to calculate, starting with some simple assumptions. In the figure below, we have split the monthly post-tax income as:

pie title Income "X:retirement" : 40 "Y:spending" : 50 "Z:other" : 10
  • X: amount to be saved for retirement (this is the unknown)
  • Y: amount spent for monthly expenses (this is known)
  • Z: amount to be saved for other goals and paid as EMI for home/car/personal loan/credit card (this is leftover from the income)

We need to calculate three numbers:

  • N1: Y/Income: this is the percentage of income spent today on monthly expenses. Suppose you earn 20 lakhs/year and spend ten lakhs/year, then this number is 50%. We have assumed this to be 50% for all the tables below. If yours is more than 50%, you need to save more per month for retirement.
  • N2: How much you have saved for retirement, as a multiple of your current expenditure. So if you have saved 50 lakhs for retirement in PF, NPS, stocks and mutual funds, then this is 5x
  • N3: We need one more figure, which is the amount to be spent in retirement to keep a similar lifestyle as a percentage of today’s expenses. So if you spend ten lakhs/year and think your post-retirement lifestyle will be similar, this is 100%. Post retirement expenses can be calculated as per this post.

How to read the tables:

  • the rows show the corpus saved as a multiple of today’s expenditure, i.e. N2
  • the columns show replacement income in retirement, i.e. N3
  • the body of the table shows the percentage of income to be invested per month for retirement. The lower this number, the better it is. If it is zero, then you have already saved enough for retirement

You can use the table of contents below to jump to the age band you are interested in quickly.

The calculations in the tables below are not thumb rules. They are actual SIP figures for the current portfolio, expenses and income of the investor including an assumption of increasing the SIP amount every year. If you need a tailored result, please see

Assumptions for the model:

  • 7% inflation both before and after retirement
  • 40 years in retirement
  • 5% increase in yearly investment until retirement
  • Risk profile is moderate (60:40 equity and debt allocation for goals > 15 years away: see this for details)
  • 11% and 3% as long term returns (post-tax) of equity and debt respectively

Table of Contents

Age-wise tables showing how much to save for retirement

Age is 30y, time left until retirement is 28y

This table shows that a 30 year old who has not saved anything (row 1), needs to start saving 67% of their monthly salary for retirement to have the same lifestyle as they are having today.

Retirement expenses > 50 60 70 80 90 100 110 120
0x 34 40 47 54 60 67 74 81
2x 30 36 43 50 57 63 70 77
4x 26 33 39 46 53 59 66 73
6x 22 29 36 42 49 56 62 69
8x 18 25 32 38 45 52 59 65
10x 14 21 28 35 41 48 55 61
12x 11 17 24 31 37 44 51 58
14x 7 14 20 27 34 40 47 54
16x 3 10 16 23 30 37 43 50
18x 0 6 13 19 26 33 39 46
20x 0 2 9 15 22 29 36 42
22x 0 0 5 12 18 25 32 39
24x 0 0 1 8 15 21 28 35
26x 0 0 0 4 11 17 24 31
28x 0 0 0 0 7 14 20 27
30x 0 0 0 0 3 10 17 23
32x 0 0 0 0 0 6 13 19
34x 0 0 0 0 0 2 9 16
36x 0 0 0 0 0 0 5 12
38x 0 0 0 0 0 0 1 8
40x 0 0 0 0 0 0 0 4

Age is 35y, time left until retirement is 23y

This table shows that a 35 year old who has saved 10x their current yearly expenses (row 6) for retirement, needs to save 56% of their monthly salary for retirement to have the same lifestyle as they are having today.

Retirement expenses > 50 60 70 80 90 100 110 120
0x 38 46 53 61 69 76 84 91
2x 34 42 49 57 65 72 80 87
4x 30 38 45 53 60 68 76 83
6x 26 33 41 49 56 64 72 79
8x 22 29 37 45 52 60 67 75
10x 18 25 33 41 48 56 63 71
12x 14 21 29 36 44 52 59 67
14x 9 17 25 32 40 48 55 63
16x 5 13 21 28 36 44 51 59
18x 1 9 17 24 32 39 47 55
20x 0 5 12 20 28 35 43 51
22x 0 1 8 16 24 31 39 46
24x 0 0 4 12 20 27 35 42
26x 0 0 0 8 15 23 31 38
28x 0 0 0 4 11 19 27 34
30x 0 0 0 0 7 15 22 30
32x 0 0 0 0 3 11 18 26
34x 0 0 0 0 0 7 14 22
36x 0 0 0 0 0 3 10 18
38x 0 0 0 0 0 0 6 14
40x 0 0 0 0 0 0 2 10

Age is 40y, time left until retirement is 18y

This table shows that a 40 year old who has saved 20x their current yearly expenses (row 11) for retirement, needs to save 44% of their monthly salary for retirement to have the same lifestyle as they are having today.

Retirement expenses > 50 60 70 80 90 100 110 120
0x 44 53 62 70 79 88 97 106
2x 40 48 57 66 75 84 92 101
4x 35 44 53 62 70 79 88 97
6x 31 39 48 57 66 75 83 92
8x 26 35 44 53 61 70 79 88
10x 22 31 39 48 57 66 75 83
12x 17 26 35 44 53 61 70 79
14x 13 22 30 39 48 57 66 75
16x 8 17 26 35 44 52 61 70
18x 4 13 22 30 39 48 57 66
20x 0 8 17 26 35 44 52 61
22x 0 4 13 22 30 39 48 57
24x 0 0 8 17 26 35 43 52
26x 0 0 4 13 21 30 39 48
28x 0 0 0 8 17 26 35 43
30x 0 0 0 4 13 21 30 39
32x 0 0 0 0 8 17 26 34
34x 0 0 0 0 4 12 21 30
36x 0 0 0 0 0 8 17 26
38x 0 0 0 0 0 4 12 21
40x 0 0 0 0 0 0 8 17

Age is 45y, time left until retirement is 13y

This table shows that a 45 year old who has saved 24x their current yearly expenses (row 13) for retirement, needs to save 45% of their monthly salary for retirement to have the same lifestyle as they are having today.

Retirement expenses > 50 60 70 80 90 100 110 120
0x 52 63 73 83 94 104 115 125
2x 47 58 68 78 89 99 110 120
4x 42 53 63 74 84 94 105 115
6x 37 48 58 69 79 89 100 110
8x 32 43 53 64 74 84 95 105
10x 27 38 48 59 69 80 90 100
12x 22 33 43 54 64 75 85 95
14x 17 28 38 49 59 70 80 90
16x 13 23 33 44 54 65 75 86
18x 8 18 28 39 49 60 70 81
20x 3 13 23 34 44 55 65 76
22x 0 8 19 29 39 50 60 71
24x 0 3 14 24 34 45 55 66
26x 0 0 9 19 29 40 50 61
28x 0 0 4 14 25 35 45 56
30x 0 0 0 9 20 30 40 51
32x 0 0 0 4 15 25 35 46
34x 0 0 0 0 10 20 31 41
36x 0 0 0 0 5 15 26 36
38x 0 0 0 0 0 10 21 31
40x 0 0 0 0 0 5 16 26

Age is 50y, time left until retirement is 8y

This table shows that a 50 year old who has saved 30x their current yearly expenses (row 16) for retirement, needs to save 42% of their monthly salary for retirement to have the same lifestyle as they are having today.

Retirement expenses > 50 60 70 80 90 100 110 120
0x 65 77 90 103 116 129 142 155
2x 59 72 85 98 110 123 136 149
4x 53 66 79 92 105 118 130 143
6x 47 60 73 86 99 112 125 138
8x 41 54 67 80 93 106 119 132
10x 36 48 61 74 87 100 113 126
12x 30 43 56 69 81 94 107 120
14x 24 37 50 63 76 89 101 114
16x 18 31 44 57 70 83 96 109
18x 12 25 38 51 64 77 90 103
20x 7 19 32 45 58 71 84 97
22x 1 14 27 40 52 65 78 91
24x 0 8 21 34 47 60 72 85
26x 0 2 15 28 41 54 67 80
28x 0 0 9 22 35 48 61 74
30x 0 0 3 16 29 42 55 68
32x 0 0 0 10 23 36 49 62
34x 0 0 0 5 18 31 43 56
36x 0 0 0 0 12 25 38 51
38x 0 0 0 0 6 19 32 45
40x 0 0 0 0 0 13 26 39

Age is 55y, time left until retirement is 3y

This table shows that a 55 year old who has saved 40x their current yearly expenses (row 16) for retirement, needs to save 22% of their monthly salary for retirement to have the same lifestyle as they are having today.

Note: The saved corpus starts at 10x of current expenses.

Retirement expenses > 50 60 70 80 90 100 110 120
10x 51 69 88 106 124 143 161 179
12x 43 61 80 98 116 135 153 171
14x 35 53 72 90 108 127 145 163
16x 27 45 64 82 100 118 137 155
18x 19 37 56 74 92 110 129 147
20x 11 29 47 66 84 102 121 139
22x 3 21 39 58 76 94 113 131
24x 0 13 31 50 68 86 105 123
26x 0 5 23 42 60 78 96 115
28x 0 0 15 34 52 70 88 107
30x 0 0 7 25 44 62 80 99
32x 0 0 0 17 36 54 72 91
34x 0 0 0 9 28 46 64 83
36x 0 0 0 1 20 38 56 74
38x 0 0 0 0 12 30 48 66
40x 0 0 0 0 3 22 40 58
42x 0 0 0 0 0 14 32 50
44x 0 0 0 0 0 6 24 42
46x 0 0 0 0 0 0 16 34
48x 0 0 0 0 0 0 8 26
50x 0 0 0 0 0 0 0 18

Understanding the table data

We will take the following example:

  • Age is 40 years, 18 years to retirement
  • The investor has saved 20x of their current expenses as retirement corpus
  • They expect that retirement expenses will be the same, i.e. 100% of the expenses today (the model adjusts this for inflation of 18 years)

The table under the “Age is 40y, time left until retirement is 18y” section shows that the investor must be investing 44% of their monthly income for retirement. If you have already saved more money, say 30x of their current expenses, this requirement drops to just 21% of the monthly salary.


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What if the percentage figure is very high

In the assumptions above, we have assumed that 50% is the total household expenses. Hence any investment figure above 50% in the tables indicates

  • current investments are too less
  • current expenses are too high

To remedy you need to do some introspection as to what needs to be done

  • reduce discretionary expenses like entertainment and travel
  • EMIs on household goods and paying too much for a car loan
  • high EMI on home loan

Any figure in the tables higher than 100% means that saving for retirement, as per current figures, will lead to a much lower corpus than needed.

A note on having the prerequisites in place

At all times ensure that you have the following in place

  • an emergency fund with 6-12 months of expenses
  • a sinking fund for insurance payments (health, car) and recurring known expenses (building maintenance, holiday travel etc.)
  • a term insurance policy as long as you have income
  • a health insurance policy (separate from the company provided one if any) for 10-15 lakhs as a base policy with a 50-100 lakhs super-top up
  • no high-interest debt like credit card or personal loans

Once you start investing,

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