Secure your Retirement
- I don’t want to depend on or be a burden on my children in my old age…
- I aspire to leave a generous inheritance for my children and granchildren…
- I should have a regular income after my retirement…
- I want to have a farm house in my village and travel often after I retire…
- Everyone’s priorities for retirement are different!
The impact of INFLATION: How much will you need tomorrow to maintain today’s lifestyle. If your household’s current monthly expenditure is Rs 50,000; In twenty years, that amount will be 2.2 Lakhs assuming a realistic rate of inflation of 7.7%. Healthcare, which contributes a significant part of a retiree’s expenses has seen much a much higher rate of inflation. Bank FDs and similar instruments are not able to beat the ferocious rate at which inflation eats away value.
Many people start thinking about their retirement at 40. Please note though, you can get a home or education loan, not a retirement loan. It’s important to START EARLY. It reduces the pressure on finances later in life and enables one to aim for an ideal retirement scenario instead of a compromise. If you start saving at an older age, not only do you have to save much more every month but also for a much longer duration to collect a similar corpus.
For example, let’s assume that you are 25, and save Rs 24,000 a year (Rs 2,000 monthly) for 10 years, till you are 35. After that, you stop saving and allow the kitty to grow. When you turn 60, at 8 per cent compounded return, your retirement corpus will be Rs 30 lakh. If you are 35 however, and want to amass a Rs 30 lakh kitty when you turn 60, you will have to save Rs 48,000 a year (Rs 4,000 monthly) for 15 years, at 8 percent.
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