Retirement Salary Replacement Ratio
Will your EPF, NPS, and gratuity replace enough of your final salary? Enter your numbers and see your replacement ratio, the gap, and how much more you need to save.
Current Situation
EPF
NPS
Other
Retirement Income Breakdown
Monthly Retirement Income Stack
What is salary replacement ratio?
Salary replacement ratio is the percentage of your pre-retirement income that your retirement income replaces. Financial planners typically recommend 70-80% as a target.
Why not 100%? In retirement, you no longer save for retirement (that's 10-15% of salary), you may have paid off your home loan, and your tax liability usually drops. 70% is generally considered adequate for maintaining your standard of living.
In India, most salaried employees rely on three pillars: EPF (mandatory), NPS (mandatory for government, optional for private), and gratuity. This calculator shows you how those three pillars add up.
The three pillars of Indian retirement income
Most Indian salaried employees have three sources of retirement income. Understanding how they work together is the first step to planning a secure retirement.
Pillar 1: EPF (Employees' Provident Fund)
Mandatory for organized sector employees. You and your employer each contribute 12% of basic salary. The current interest rate is 8.25%. At retirement, you can withdraw the full corpus. Most people use a systematic withdrawal plan (SWP) to generate monthly income.
Pillar 2: NPS (National Pension System)
Mandatory for government employees since 2004, optional for private sector. At retirement, you must use 40% of your corpus to buy an annuity, which gives a monthly pension for life. The remaining 60% is available as lump sum.
Pillar 3: Gratuity
A lump sum paid by your employer for 5+ years of continuous service. Calculated as (Last Drawn Salary × 15 × Years of Service) / 26, capped at ₹20 lakh. Most retirees invest this and draw down gradually.
The 70% target
Financial planners recommend targeting 70-80% of your final salary. This assumes your expenses drop in retirement: no more saving for retirement, no commute, possibly no EMI. But healthcare costs rise, so don't aim too low.
Disclaimer: This calculator projects future values using assumed rates of return and salary growth. Actual EPF interest rates, NPS returns, and annuity rates will vary. The 4% safe withdrawal rate is a rule of thumb, not a guarantee. For comprehensive retirement planning, consult a SEBI-registered investment advisor.
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