Retirement need estimation
Category : Retirement Planning
How much money do you need when you retire after certain times and want to maintain the same standard of living.In my earlier topic I discussed about how much important is to save for post retirement to sustain for at least 15 to 20 years after retirement.Here, I will discuss regarding the annual expenditure that you will require when you retire.
Now, let’s take a very simple example.
Mr. Adityanath is 32 years old.His current annual expenditure is ₹.4,80,000/-.He will retire at the age of 60. His annual expenses is expected to rise by 7% every year.Also, he wishes to maintain the same standard of living post retirement.Now, what will be his annual expenses after retirement i.e. after 28 years from now.
|Let’s summarize all the information provided above.|
|Present expenses per year||₹.4,80,000.|
|Years to retire from now||28|
|Annual Inflation rate(%)||7%|
Therefore, we need to calculate the annual family expenses after 28 years when Mr. Adityanath retires at the age of 60.
Therefore, we can see that the current annual expenses of ₹4,80,000/- will turn into ₹31,91,442/- in just 28 years with inflation rate of 7%.And if the actual inflation rate jumps to 8% then the annual expenses will also jump to ₹41,41,011/-.This is quite unbelievable that for just for 1% increase in the inflation rate the future annual expenses is going up by ₹9,00,000/-.
Are we really prepare for this?This is not a mere calculation rather it is a fact.One very important thing also I would like to add here is that no one really wants to maintain the same standards of living rather everyone wants to upgrade it with the passing times.Living standards tend to increase along with the increase of earnings and also along with times.
So, you need to save for your future in such a way that it may fetch you an annual income of at least ₹41 Lakh. Generally speaking it might look very difficult when you look at it. But it is actually easy if one starts early and make smart decisions.Contribute as much as you can from the very beginning to your retirement portfolio.Most, importantly you have shift your fascinations from fixed income instruments to equity related products.This smart choice can reach you to that hefty corpus that you may need after retirement.