Introduction
Have you ever considered how much you’ll need for a comfortable retirement? It’s a question that often catches people off guard, as I discovered in two recent conversations that shed light on the surprising lack of awareness among well-educated individuals regarding the necessary retirement corpus. In this blog, we’ll delve into the real stories and real-life examples to illustrate the critical importance of planning for a substantial retirement fund.
The Disconnect
In my first conversation with a finance professional holding a Company Secretary’s Degree, I was taken aback when she confidently stated that her 70-80 lakhs of investments would suffice for retirement. Similarly, a well-traveled individual with a successful career in the US showed surprising naivety about the amount required for a comfortable retirement in India. These encounters highlighted a common trend: educated individuals often underestimate the need for a robust retirement corpus, revealing a widespread lack of understanding about personal finance requirements.
Realistic Examples:
Let’s bring the point home with two examples. Mr. Sham, a 40-year-old professional, aims to retire in 15 years, requiring a monthly income of Rs. 1.5 lakhs to sustain his desired lifestyle. Considering a 7% inflation rate and post-retirement investment returns at 8.60%, Mr. Sham needs a corpus of Rs. 11.40 crores. On the other hand, Mrs. Ragini, aged 30, plans to retire at 55, seeking Rs. 1 lakh per month for a comfortable life. Her required corpus? A substantial Rs. 15 crores.
The Time Factor
The key takeaway is clear: to provide for 20-25 years of retirement, you must accumulate a considerable corpus during your working years. Yet, how many of us are aware of this reality, and more importantly, how many are willing to start planning as early as possible?
Retirement Planning Essentials
When embarking on retirement planning, we at Gaining Ground consider various facets, including asset mix, cash flow planning, and contributions to retirement schemes like employee provident funds, public provident funds, and national pension schemes. While the numbers may seem daunting, remember that starting early is the key to building a substantial retirement corpus.
The Power of Compounding:
As a reassuring fact, accumulating Rs.10 Crore is not difficult. If you start saving early and consistently invest Rs. 35,000 monthly for 30 years at a compounding rate of 11%, you can accumulate a comfortable Rs. 10 crores. This underlines the importance of early action in securing your financial future.
Are You Ready for Retirement?
As we receive numerous inquiries about retiring quickly and achieving financial freedom, the fundamental question remains: Are you ready? Can you make a start? To find answers to these questions and determine your specific number, contact us for personalized guidance on your retirement planning journey. Your financial security is too important to leave to chance; let’s plan for a secure and comfortable retirement together.