What is the 25x rule for retirement?

The 25x rule for retirement is a guideline that suggests you should aim to save 25 times your expected annual expenses to ensure a comfortable retirement. This rule is based on the fact that if you withdraw 4% of your retirement savings each year, your funds should last for at least 30 years. Here’s how it works:

• Calculating Your Needs: If you foresee needing ₹6,00,000 annually in retirement, you will multiply this amount by 25:

Retirement Savings Needed=₹6,00,000×25=₹1,50,00,000

• Withdrawal Strategy: By adhering to the 4% withdrawal rate, you can maintain your lifestyle without finishing your savings too quickly.
• Adjustments for Inflation: It’s important to consider inflation when applying the 25x rule, as rising costs can affect your purchasing power over time.

This rule provides a straightforward idea for retirement planning, helping individuals set clear savings goals. You may use the Retirement Calculator for prudent retirement planning.