Retirement planning becomes more layered when others rely on your income. In India, it is common for individuals to support a spouse, children or even elderly parents long after they stop working. This means your retirement corpus must cover not only your needs but also theirs.
If you have dependents, estimating your retirement corpus needs more than a general formula. Each financial responsibility adds weight to the final figure. Here is how to think through and build a retirement corpus that works for a household that supports dependents.
1. Start with the total cost of your family’s life, not just your own
Do not just plan for your personal expenses. List out the current monthly costs of maintaining the household. Include your spouse’s expenses, education costs for children and the ongoing medical needs of parents. Add rent or home upkeep, food, travel, mobile and internet bills, premiums for insurance policies and money given to household help.
This estimate must cover the lifestyle you want to maintain. If your spouse does not earn or your children are still studying, the burden will be on your retirement income. Multiply the total by 12 to get the annual requirement. Add 15 to 20 per cent more to allow for irregular or emergency costs. Then consider how long each dependent will need this support.
2. Plan for the longest financial responsibility, not the shortest
Retirement timelines are not just about how long you may live. If you have dependents, you must factor in their timelines too. Your spouse may live longer. A child may take time to finish their education and become independent. A parent may need care well into their nineties.
If you retire at 60 and your spouse is financially dependent on you, your retirement corpus must last for as long as they are expected to live. Now, if your child is 10 years old at the time of your retirement, you will also need to cover their school fees, college education and living expenses for at least the next 10-15 years. If you are also supporting an elderly parent, medical care and daily assistance may be required.
Each dependent comes with a different timeline. You must consider the longest one while calculating how long your retirement savings should last. This helps to make sure that you do not run out of money when someone in your family still needs your financial support.
3. Adjust for inflation, especially in medical and education costs
Most people apply a flat inflation rate of 6 or 7 per cent. But not all costs rise at the same pace. Education costs may rise by 8 to 10 per cent every year. Medical care, especially for elderly parents or those with chronic health issues, may rise even faster. You must apply different inflation rates to different categories of spending. This helps estimate your future needs more accurately. Without this adjustment, your corpus may seem sufficient on paper but fall short in practice.
4. Create a separate reserve for medical care
Medical insurance is important, but it may not be enough when you have dependents. Many health-related costs are not covered by insurance. This includes routine scans, therapies, home care and follow-ups. These out-of-pocket expenses can add up quickly.
It is wise to keep a separate health fund aside. Try to build a reserve that is at least four to five times your family’s current annual medical expenses. Keep this amount in a low-risk, easily accessible instrument like a short-term debt fund or a savings-plus plan. This ensures you are never forced to dip into your core retirement income during a crisis.
5. Reconsider the 4% withdrawal rule
The rule suggests that you can withdraw 4% of your retirement savings every year without running out of funds. But this guideline was built around single individuals, often without dependents.
When you are supporting others, it is safer to reduce your annual withdrawal to 3% or even 2.5%. This helps protect your corpus over the long term. If your annual household expense is Rs. 9 lakh and you withdraw at 3%, you will need a retirement corpus of at least Rs. 3 crore.
6. Separate the major one-time costs from your retirement flow
Monthly income is only one part of the financial picture. Life includes bigger moments — higher education for your child, a medical procedure for a parent or a wedding in the family. These costs can be substantial and are not always predictable.
Set aside separate funds for these goals. Keep them in instruments that offer capital protection and quick access. This ensures your core retirement corpus remains focused on regular, long-term needs and is not interrupted by sudden lump-sum requirements.
7. Avoid relying entirely on uncertain income sources
You may own a property or expect support from grown-up children. But these sources are not always reliable. Real estate markets can slow down. Adult children may face financial challenges of their own. Rental income may not be consistent, and government schemes may change. Base your primary retirement plan on instruments that give predictable income. These can include life insurance with monthly payouts, pension policies or systematic withdrawal plans from mutual funds. Consider these your foundation, not a fallback.
8. Use a retirement plan calculator with detailed input options
Many people rely on rough estimates or generic figures when planning for retirement. But if you have dependents, this approach may fall short. A retirement plan calculator helps you consider real-life factors like family expenses, inflation, medical costs and the number of years each dependent may need support. It gives you a clearer picture of how much you actually need. You can also revisit the plan from time to time as your circumstances change.
Final thoughts
When you have people who depend on you, retirement is not just about comfort. It is about continuity. You are not only stepping away from a job, but also stepping into a phase where your decisions shape your family’s security. There is no fixed figure that applies to everyone. The right corpus for you depends on who you support, for how long and how their needs might grow. Begin early. Adjust your numbers often. And most importantly, prepare to take care of those who have always counted on you.
