Corpus
The total lump sum amount required at the start of your retirement to fund all your future expenses until the end of your life. This is your "Magic Number."
Inflation (The Silent Killer)
The rate at which the general price of goods and services rises. It reduces purchasing power. ₹100 today will buy less in the future. In retirement planning, ignoring inflation is the biggest mistake you can make.
Real Rate of Return
The actual growth of your money after adjusting for inflation. Formula: ((1 + Nominal Rate) / (1 + Inflation Rate)) - 1. If your FD gives 7% and inflation is 6%, your real return is less than 1%.
Withdrawal Rate (SWR)
The percentage of your corpus you spend each year. The global standard is the "4% Rule," but in India, with higher inflation and interest rates, a 3% to 5% withdrawal rate is often discussed.
Sequence of Returns Risk
The risk that the market crashes just as you retire. If your portfolio drops 20% in Year 1 of retirement, your corpus may deplete much faster than planned. Mitigate this by holding 2-3 years of expenses in cash/liquid funds.
Longevity Risk
The risk of outliving your savings. This is becoming a major concern as life expectancy increases. Planning for a longer life (e.g., up to 90 or 95) is the best hedge against this risk.
Annuity
A financial product (usually from insurance companies) that pays a fixed income for life in exchange for a lump sum. In NPS, purchasing an annuity with 40% of the corpus is mandatory.