What’s the right monthly SIP for retirement comfort?

How much should one invest monthly in mutual funds for retirement comfort? Experts say the answer depends on several key factors, including current expenses, age, investment horizon, inflation, and anticipated returns.

Retirement planning is essential for maintaining financial stability and independence in later years. In India, this task is often postponed until retirement is near, but those who start early greatly benefit from the power of compounding and systematic, disciplined investing. “Investors are increasingly opting for Systematic Investment Plans (SIPs) in mutual funds due to their flexibility, diversification, and higher growth potential, which surpasses that of traditional options,” said Atul Shinghal, founder and CEO, Scripbox.

To determine the ideal monthly investment, some basic calculations are essential. Shubham Gupta, co-founder of Growthvine Capital, said, "The first step in retirement planning is not deciding how much to invest monthly, but figuring out how much you actually need. Begin by estimating post-retirement expenses: many costs, such as EMIs and children’s education, will decrease, but healthcare and lifestyle costs often increase. Suppose your current household expenses are ₹50,000 per month. After retirement, you may need only ₹35,000–40,000, but once adjusted for 6% inflation over 25 years, that figure could touch ₹1.5 lakh per month. To sustain that for 25 years of retirement, you’d need a corpus of about ₹4–5 crore."

Gupta said that once you know the target, work backwards to calculate monthly investments. If you have 25 years to retire and assume 12% returns (equity-heavy portfolio), a ₹22,000 monthly SIP can get you close. If you’re more conservative and target 10% returns (balanced portfolio), the monthly SIP requirement rises to approximately ₹32,000. "This is why return assumptions must reflect your risk appetite, since not everyone is comfortable with high equity exposure for long periods. SIPs, combined with step-ups as income grows, help bridge this gap and make the retirement goal achievable," said Gupta.

Additionally, Navy Vijay Ramavat, MD, of the Indira Group, emphasised how one can invest if they do not have enough money. He said, "At 12% returns, an SIP of ₹30,000– ₹35,000 per month from the age of 25 is effective. If that is too much, start with ₹12,500 and use a 10% annual step-up SIP. At 10% returns, a stagnant SIP of approximately ₹54,000 per month is needed. Or start with an SIP of ₹17,000 with a 10% step-up SIP."

"The fundamentals remain the same, whether you assume 12% or 10% returns. Start as early as possible, consider inflation in your investment plans, and scale your retirement funding through step-up SIPs to ensure you achieve your desired retirement lifestyle," said Ramavat.

Conservative assumptions are vital when planning for retirement’s critical goal. They provide a cushion against the unpredictability of market fluctuations, inflation overruns, and other unforeseen life events that could threaten financial comfort.

“Such cautious planning ensures that the retirement corpus remains sufficient even if the market underperforms or living costs rise faster than expected. Adopting conservative choices—such as hybrid or debt mutual funds—also helps maintain capital and provides more stable income, an essential consideration for older investors,” said Shinghal.

SIPs bring discipline to retirement planning, offering the advantage of rupee cost averaging and adaptability to changing personal and economic circumstances. Investors can begin with modest contributions and gradually increase them as their income grows, making the process manageable alongside other financial commitments.

Mutual fund calculators also allow investors to input their age, target retirement age, current expenses, inflation rate, and expected returns. These digital tools provide personalised suggestions for monthly SIP amounts, helping investors to clarify their objectives and monitor their ongoing progress.

Attaining retirement comfort via mutual funds is achievable with proper planning and discipline. "Conservative estimates and decisions help protect your lifestyle from risks and uncertainties, guaranteeing financial stability during the golden years. Beginning early and adjusting as needed is the most reliable way to ensure peace of mind and enduring prosperity in retirement,” said Shinghal.