Friday, August 28, 2009

How much should I save for retirement?

You retirement amount is a combined factor of the lifestyle you want to live during your retirement,your current age and the age at which you wish to retire.
Lets say you are 30 years old,have monthly expenses today of Rs.15000 pm and will retire at age of 60.
Lets assume in Indian scenario, inflation stays at 6% and your savings grow at 9% (if you make more the better)
To live the same lifestyle,you will need approx Rs.90000 pm after 30 years [ FV(6%/12,360,0,-15000) ]
Lets say you will leave another 20 years without any health problems.To live financially independent you will need approx 1.8 crores (this is being too optimistic that you dont face hospitalisation expenses from your savings)
To save 1.8 crores in 30 years, you need to save at least Rs.10000 pm, compounding it monthly (or annually) at 9%
If that looks easy to you,remember it requires discipline to save that amount and invest it every month growing at 9%. If thats not possible,may God save you!

Even if you do the above, at the end of it,you will just be able to sustain yourself.
The question is do you want to live that way in retirement?
I leave it to you to find the answer. Should you need my help feel free to mail me.

Click here to submit your site to the search engines for free!

Free Advertising