Retirement Projection

Retirement projection — how it works

The future value of a monthly contribution at a constant rate comes from FV = S·(1+i)^n + P · ((1+i)^n − 1) / i. Here S is the starting balance, P the monthly contribution, i the monthly rate and n the number of months. Say you put R$ 500/month at 0.6%/month real for 30 years (360 months), starting from zero. That works out to 500 · (1.006^360 − 1) / 0.006 ≈ R$ 595,000.

• Public pillar (INSS) — under Constitutional Amendment 103/2019, the minimum age is 65 (men) or 62 (women), plus a minimum contribution of 20 years (m) or 15 years (w). The benefit is the average of 100% of contribution wages since July/1994. You start at 60% of that average and add 2% for each year beyond 20/15. The old pre-reform perk of dropping the lowest 20% of wages no longer applies.
• Private pillar (PGBL/VGBL) — with PGBL you deduct contributions up to 12% of annual taxable income, but the full withdrawal gets taxed later. VGBL gives no deduction up front and taxes only the earnings. The regressive table runs from 35% down to 10% past the 10-year mark; the progressive one follows IRPF.
• The 25× rule (Trinity Study) — if you pile up 25× your annual spending, a 4% yearly withdrawal has historically held up for 30 years or more. Spending R$ 5,000/month means a target of R$ 1.5 M in accumulated capital.

Brazilian context

If you're a CLT employee, the INSS contribution isn't optional. The real question is how much more to set aside through PGBL/VGBL or direct investments like Tesouro IPCA+, ETFs and FIIs. For autônomos paying the carnê, INSS coverage is a good deal thinner, so the private pillar ends up carrying most of the retirement. The FIRE movement (Financial Independence, Retire Early) rests on the same math, and it's caught on among Brazilian software engineers and consultants.

FAQ

Should I use a real or nominal rate? For retirement projections, go with a real rate, the one above inflation, since that's what keeps purchasing power intact. The Brazilian benchmark here is the Tesouro IPCA+ yield, which sat around 6% per year real in 2024.

PGBL or VGBL? PGBL comes out ahead only when you file the complete IRPF form and earn enough taxable income to actually use the 12% deduction. Short of that, VGBL is the better bet.

Is INSS enough? For anyone earning above minimum wage, almost never. The INSS ceiling sat around R$ 7,800/month in 2024, and the actual benefit can land well below that under the post-2019 formula. Most middle-class workers end up needing a private supplement.