[abhishekjoshi84]

Originally Posted by DigitalOne

Do a "category-based" calculation as the video suggests.

I have a spreadsheet listing most of most of my expenses and future expenses and I apply an inflation number for each row based on trend in past few years.

For ex. Highest inflation in health insurance and medical expenses.

[Mystic]

I have given my views on this thread multiple times and having read the recent views of esteemed members, I want to re articulate my views again. I am a living example of retired man for 2 years now.

I took a call to retire 1 year ahead of 60 years after having worked in IT for many decades in dozens of countries including USA. I am at the peak of my career and in the best of my health with zero prescription medicines at time of retirement. Many people including my boss advised me to continue my private consulting as there are a very few people in this world matching my profile or expertise and I can still market myself in IT.

I decided no more touching laptop again wrt consulting. After having thought about it from all angles wrt emotional, financial angles, I took a call to retire and am sticking to it. Lot of things happened in the past 2 years but nothing significant to take back my decision.

No amount of money in savings is good enough in this world. One may have to see surprises in terms of health care expenses, surprises to part of savings in equity, gold, forex variations etc. Come what may, one has to be emotionally strong to go on with life and not get depressed. Having a strong foundation spiritually helps but it is a complicated subject to explain. I have seen some of my colleagues reevaluating their voluntary retirements just because of some reasons which were totally unexpected. No one can predict the future especially in the present situation of Kangaroo market and gold price variations etc.

My personal advice is to maintain good relationships with children for emotional support. Build the relationships so that adult children genuinely look forward voluntarily and come to your home to spend time with you.

[dsuman]

Have lived in Delhi since 1980 and shifted to Hyderabad in 2012 which is closer to my Hometown. My mother Retired in 2016 so shifted to my hometown in 2017 and built a house recently. This was the plan all the time. Currently my Family lives in my Hometown. Though my job is in Hyderabad, Work From Home allows me the flexibility to stay away from Family for 10 days in a month. My expenses have come down drastically after moving to my Hometown which is a Tier 3 Town. So I feel my Retirement is also set (which is after 19 years) to be in my Hometown

[Romins]

Originally Posted by m8002?

All these moving to Tier 2 or Tier3 cities is just talk and will remain so. Very few people move back to smaller towns after spending 30+ years in a Tier 1 city. Not telling 0% but will be a very small number.

Yes, very few people can take that step. The main reason my friends quote is social circle. It is true that you will find a bit difficult to build your circle in a totally new Tier 2/3 city.

[Sober_Motorhead]

Was forced to get off the job treadmill, earlier than most. Adding my two cents:

-If you remain un-engaged after retirement, you are more likely to brood and overthink about money, even if you have enough.
-If you are engaged after retirement, you are more likely to make peace with what you have.

For many who have reached a stage where you are contemplating retiring, it is mostly the discretionary type expenses that could give you heartburn, post retiring.

Have immensely benefited by living well within my means – especially w.r.t. discretionary spends, during well-paid years. Resulting savings is why I now have time to enjoy reading and writing in this wonderful forum and not be at the diktat of forced employment.

Am human. Do miss Nobu, Hakkasan, Zuma’s of the world at company expense. But we adapt. The Dosa’s in Bangalore are no less exciting. And the coffee – better😊. Ability to spend time with family – the best. Where else can you chat for so long as a family, but in the car in Bangalore traffic.

[srsrini]

Originally Posted by Asish_VK

I agree and disagree at the same time.

....

On the other hand, if someone is content with a simpler, slower-paced life with modest needs, they may not need as large a retirement fund as some of the figures floating around on social media suggest.

I believe the original discussion was centered around a "safe" or baseline retirement corpus — enough to cover essential needs without financial stress, not necessarily a lavish lifestyle.

So, it's not one-size-fits-all. Retirement planning should align with the kind of life you want to live, not just average estimates.

The last line is bang on. During working years, there is really no yardstick on how much is spent - every family has their own level. Why would it be different in retirement? When planning, you would have to base it on the lifestyle that you want.

By the way, in many forums there are always questions about the corpus a person retired with. i have been away from corporate for 6 years now, and only my spouse and I know the corpus.

[Axe77]

I’m beginning to really like Ravi Handa. This interview with Ravi was a really nice watch and he touches on so many of the facets we have discussed here but in his own inimitable style - forthright and cutting things to basic brass tacks, including that of FIRE etc.

PS: Ignore the click baity thumbnail image pulling views with the 12 cr number. The interview itself is quite nice and touches a wide range of related aspects.

https://youtu.be/nXKM7ImEfzs?si=oXGbtNhj0T_5mA5J

[V.Narayan]

I've been reading with some vicarious interest on the contents of the previous several pages. As someone who is successfully retired and stable in my second non-business career and home finances {with God's Grace} I would like to table a few pointers for the young on this forum.

# Far too many of these video podcast financial influencers talk through their hat to create a fear of the unknown in young minds. Fear in order to rope in more customers for their advisory/broking business. None of these advisors have retired or walked that journey.

# Almost all of them either do not factor in inflation in your earnings while counting it in your costs or factor inflation lower for your earnings and higher for your costs. Keep it simple - ignore inflation on both sides of the equation - you will end up with the basket of savings you will need at 65 or 60 in today's money which you can relate to. Then work from there.

# Your basket of savings of say equity, provident fund, fixed deposits put together will overall yield you a return that is inflation ++ unless you are over clever with equity speculations and derivatives. So stay focussed on your saving in a healthy manner and dont bean count the end corpus. Too many of us destroy capital by jumping assets or speculating in the hope of striking it rich. Be the tortoise not the hare.

# If you are a car owning member of Team BHP and earning a average salary of a middle class person in India with middling career prospects you will save enough to survive comfortably in your retirement. Moving out of super expensive places such as Bangalore or Mumbai might help. If your career does even moderately well you will more than just survive.

# My wife and I froze our standard of living about 20 years ago while we both continued to earn & save for several years after that. As a consequence we still enjoy a very decent standard of living, one which we are used to and one which will survive inflation in the 15 or 20 years we have left. If we had continued increasing our expenditures in line with our incomes then things could have been more grey.

There is a lot more I could write on regarding health insurance, buying a home, where to settle, writing a will etc but on this post I wanted to stay focussed on building your basket of savings. Saving for retirement is two ounces of discipline, steady on your savings, avoiding the temptation of jumping assets all the time and wrapped up with four ounces of common sense.

[Dry Ice]

Originally Posted by V.Narayan

…
Saving for retirement is two ounces of discipline, steady on your savings, avoiding the temptation of jumping assets all the time and wrapped up with four ounces of common sense.

Words of wisdom! Thanks for sharing.

We read a lot about the accumulation phase, but it’s kinda hard to find decumulation tips. Since you have been through this journey, it would be great to hear your perspective about this phase, if you feel comfortable sharing.

With ever changing avenues of investments (and their tax treatment), it is very hard to plan 20-30 years into the future.

[V.Narayan]

Originally Posted by Dry Ice

Words of wisdom! Thanks for sharing. We read a lot about the accumulation phase, but it’s kinda hard to find decumulation tips. Since you have been through this journey, it would be great to hear your perspective about this phase, if you feel comfortable sharing. With ever changing avenues of investments (and their tax treatment), it is very hard to plan 20-30 years into the future.

Dear @Dry Ice, always pleased to share what little I have experienced. I did not quite understand what is meant by decumulation. If you could clarify I could write on it. Also share a rough idea of your age range (20s, 30s or 40's) to make my response more relevant.

[dailydriver]

Originally Posted by V.Narayan

I did not quite understand what is meant by decumulation.

Decumulation is the reverse of accumulation. Whereas one accumulates by adding small amounts at regular intervals to build a corpus, one decumulates by withdrawing/liquidating small portions from the corpus, as per needs.

* * *

Slightly off topic but still relevant to this thread:

My father, a good man nearing 70, was a wise accumulator. Within his limited means, he had managed to build a comfortable fund at retirement. However, instead of investing/parking the sum in a financial instrument that could give him regular payouts (as I suggested), he chose to construct an additional floor on our existing house, in anticipation of steady rental income that would take care of his monthly expenses for years to come.

With everyone keen on owning a house and people looking to rent newer houses with latest upgrades, these days he struggles to find tenants on a regular basis. The rental income is uncertain, the upkeep and taxes high, plus the hassle of interacting with prospective and present tenants is truly tiresome.

The sum utilised for house construction would have - even in a simple FD with a nationalised bank - got him an after tax income sufficient for living in modest luxury. But more importantly, the flow would have been steady and certain, something that's sadly not the case with rental income.

* * *

Coming back to the point, I see my father as a good accumulator but an unwise decumulator. V.Narayan's case doesn't appear to be so.

[V.Narayan]

Originally Posted by Dry Ice

We read a lot about the accumulation phase, but it’s kinda hard to find decumulation tips. Since you have been through this journey, it would be great to hear your perspective about this phase, if you feel comfortable sharing.

Originally Posted by dailydriver

Decumulation is the reverse of accumulation. Whereas one accumulates by adding small amounts at regular intervals to build a corpus, one decumulates by withdrawing/liquidating small portions from the corpus, as per needs.

Thank you @DailyDriver for that explanation. I'm clearly not in touch with the latest terminology :-) .

I am not in the phase of shedding my assets per se but yes I have stopped actively accumulating more of them. No more chasing real estate or farm houses just because of FOMO and desire to keep up with the Joneses. Here I am fortunate that my spouse is not a materialistic person in the traditional sense. But it requires a certain confidence and resolve not to acquire.

Second thing I did around age 60 is to sell off all real estate assets and put the money into financial assets. The hassle of managing real estate is IMHO a pain and the returns other than capital appreciation almost a pittance.

Third, what I wish to give to my children and grand children I am doing now in stages while I am alive instead of making everyone wait patiently for the old croc to die.

Wrote a fresh will to reflect life and responsibilities as they are now, registered it and gave a copy to kids and wife.

And finally my advice to readers would be to donate, lumpsum or in bits, something to a good well run charity. How much is not as important as how willingly we do it with grace and humility. We need to not only lessen the burden of our worldly assets but also the baggage of desires in our hearts and souls.

The impediments to decumulation are FOMO, a fear that enough is never enough, that we need to prepare for financial armageddon, that the RoI is never good enough and a better RoI is just around the corner. The grip of moh and maya can be very strong and not quite visible to us.

Hope this helps.

With ever changing avenues of investments (and their tax treatment), it is very hard to plan 20-30 years into the future.

Don't chase perfection of corpus amount or RoI. Chase the minima you need and ensure that is locked in. Rest is a bonus. Long long ago I determined roughly how much I will need as a retiree to live on, added an inflation of 5% per annum, and invested in a series of pension plan annuities with HDFC Life. As my earnings grew I added additional annuities to invest in. Today all but one of those annuities have matured and yield a annual income which will go on for life of both my spouse and me. The return wasn't the best but it was a substantial forced saving each year, non-withdrawable {so no tinkering by me} and now I don't have to bother or manage the corpus. After that all other investments in equity, real estate, mutuals were for the top up corpus.

[dailydriver]

Originally Posted by V.Narayan

And finally my advice to readers would be to donate, lumpsum or in bits, something to a good well run charity. How much is not as important as how willingly we do it with grace and humility. We need to not only lessen the burden of our worldly assets but also the baggage of desires in our hearts and souls.

From what we get, we can make a living; what we give, however, makes a life.

- Arthur Ashe

[Veeru]

Originally Posted by dailydriver

Decumulation is the reverse of accumulation. Whereas one accumulates by adding small amounts at regular intervals to build a corpus, one decumulates by withdrawing/liquidating small portions from the corpus, as per needs.

* * *

Slightly off topic but still relevant to this thread:

My father, a good man nearing 70, was a wise accumulator. Within his limited means, he had managed to build a comfortable fund at retirement. However, instead of investing/parking the sum in a financial instrument that could give him regular payouts (as I suggested), he chose to construct an additional floor on our existing house, in anticipation of steady rental income that would take care of his monthly expenses for years to come.

With everyone keen on owning a house and people looking to rent newer houses with latest upgrades, these days he struggles to find tenants on a regular basis. The rental income is uncertain, the upkeep and taxes high, plus the hassle of interacting with prospective and present tenants is truly tiresome.

The sum utilised for house construction would have - even in a simple FD with a nationalised bank - got him an after tax income sufficient for living in modest luxury. But more importantly, the flow would have been steady and certain, something that's sadly not the case with rental income.

* * *

Coming back to the point, I see my father as a good accumulator but an unwise decumulator. V.Narayan's case doesn't appear to be so.

I agree with your statement, even we found it hard to find a suitable tenant for a long time and over that rental yield is low as well. Better to invest money elsewhere rather than depending on rental yield. There is no point in spending money to build a floor/house only with the intent of good RoI, many houses are vacant since Covid in the city I live.

[JediKnight]

I am in job where I can get laid of any time and the probability of finding a similar job is very slim. Hence I have to be retirement "ready" all the time. This is how approach the problem:

My first bucket of expenses is kids education. Right now that is my biggest expense and likely to grow in future as well. So I have to finance this separately. I have created a fund for that. This should be able to fund all the school fees and decent education in India. But if my kids decided to graduate out of an Ivy league they will have to take on student debt.

My second bucket of expense is real estate. Again financed separately. I am renting at the moment. But I may buy soon. Again I have created a fund for that. This has enough money that I can liquidate it and buy a decent 3bhk any time. Since i may have to buy a house in 2-3 years time, this has mostly liquid assets ( read arbitrage/debt ) and is growing at 6-7%. Many people are not aware but you do not have to pay capital gains tax if you invest the money to buy home even for mutual fuds.

My third bucket is karcha-pani. Basically for daily living expenses Again i have separate fund for that. This should cover my daily living expenses growing at 6% for ever in case of job loss.

My fourth bucket is discretionary/un-planned risk: I have a fourth bucket again where money goes over First/second and third buckets. This is for un-planned/un seen risks or for discretionary stuff like buying high end audio etc. ( which is a hobby).

On top I have a small fund for medical emergencies on top of my company health insurance. I plan to dissolve this fund and take personal health insurance instead. Should I have done this earlier but did not do. But better late than never.

Do not need term insurance or emergency fund as I already have to covered in my buckets ( 1/2/3).