[SNA411]

Originally Posted by wildsdi5530

So by my calculations, yearly expenses will be Rs. 48 Cr. and for 30 yrs of post retirement life , Rs. 1.5 Lakh Cr would be an adequate corpus.

Isnt 50 crore per year x 30 years = 1500 crore?

Unless I missed something extremely elementary.

[rahul4321]

Age: 37
Profession: CA
Unmarried at present - never planning to marry
Not going to have any kids
Own a house and a car - Ford Aspire and two motorcycles - a KTM 390 and a Himalayan
My life revolves around working and touring on my motorcycles and reading fiction. The Himalayan will outlive me most probably .

Why the background was necessary

Plan after retiring in 18 years: Travel India on the Himalayan and stay at places for 1-2 months before moving onto the next destination. No planned investment in real estate or any other long term investment avenues since i have no one to leave it to.
Major expense during travels: Petrol
Other expense during travels: Lodging - i am a dormitory guy who lives in workation hostels (Zostel, Gostops kinds) where a bunk bed cost around 500-800 INR / day. Food 3 times a day would cost - another 800 to 1000 bucks

Major planned expense: Thar AT Diesel for when my knees and back give up and i cant ride anymore around the age of 60-65 and then i will be overlanding in the Thar

Thats it then. It will be touring and overlanding in the Thar until i leave this planet finally.

Current corpus which i have saved in Banks and Liquid Mutual Fund Investment: 50 L
Planning for 1.00 to 1.50 CR. Another 10-15 years of slogging.

Any excess money at the time of my death will be left to institutions caring for stray animals and providing them with shelter and medical treatment.

[whitewing]

Originally Posted by BigB

Right question would have been,
What is the ideal multiple of your annual expenses as your retirement kitty?

Completely agree! Hence, didn't vote.

Originally Posted by Sanjeev V S

40X of current annual expenses

Adding to that, there are other variables to this
- the multiple of X needed would depend on the life expectancy post retirement
- the expected rate at which the corpus moves(+ve/-ve)
- One off expenses (mainly health) as one ages.

Also, the often quoted SWR study was with data in US(3-4% SWR rate). India probably will have a different inflation rate. So, debt and equity will probably not be similar.

[Transmission]

This is a topic that I have researched quite deeply. So deep that its a primary reason why I put off purchasing a car for all these years

So I think I am in a reasonably good position to answer this question, as well as dispel some misunderstandings I read in the responses above.

Note that I am not a registered Financial Advisor and no part of what I say here should be construed as financial or investment advice. I am only sharing my learnings as-is with no assurances that they are correct.

Originally Posted by SR-71

With this assumption in mind, what do you think your retirement kitty should be.

The correct way (one of many to be honest, but my preferred one) to look at a retirement kitty requirement is always by means of expenses - meaning if your regular expenses are low, then you can make do with a smaller kitty. If your annual expense is X rupees, then it was shown - statistically - that having a retirement kitty of 25x will last you 30 years if that was made up of about 60% equity and 40% bonds with annual rebalancing between the two (done without considering taxes). The thing is, this statistical simulation known as the Trinity Study was done using US data - and not Indian data. Calculators like FireCalc let anyone simulate and understand these for themselves.

My analysis of the same using Indian data shows that the general lessons from the Trinity study hold up even in India. But the fact that the history of Indian equity markets is really short compared to the time periods we are dealing with (30+ years) it doesnt provide one with as much of a consolation as the US-data would to someone living in the US.

Originally Posted by dragonfire

Assuming you live by with 1L of income today and returns from your investments keep up with inflation,

1L x 12 months x 25 years = 3 crores.

That is all you need to retire.

And this Trinity study is where this magic 25x was picked up by a lot of people. But what they often forget is that the Trinity Study is just a statistical observation and that too only valid of 30 years in the USA. If your retirement duration is longer than 30 years thats something you definitely need to keep in mind. Also, the data is from the US - and even within the US past performance of a portfolio is no guarantee of future performance - so thats another thing to be wary of.

Its also often seen in other forms - often described as a Safe Withdrawal Rate or SWR. If a 25x corpus lasts you 30 years and your annual expense is X then X/25X = 4% and this is referred to as a SWR of 4%.

If instead you decided (lets not get into the how yet - that will come later) you need 30X then your withdrawal rate (WR) is 3.33% (X/30X = 3.33%). In short smaller the WR you have larger your corpus and higher the chance that you wont run out of money before your death (assumed to be some constant age - whatever you choose).

Originally Posted by dragonfire

Even conservative instruments like FD will keep up with inflation.

In the long run - 20+ year runs - FDs havent kept up with inflation after taxation ever in the history of India. I have literally crunched this number using historical data from terribly laid-out RBI webpages.



Not having traditionally inflation-matching/beating instruments like equity, real estate in your retirement portfolio means that you need a lot more than someone who does. The price you pay for reduced volatility is the money you silently lose to inflation. And dont forget that not all instruments are taxed identically: a very different ball game holding a 70L corpus in FD vs a good Ultra-short-term (UST) fund.

For a person who's looking at annual expenses of about 6L or thereabouts there is significant tax gains to be had if not invested solely in FDs.

Originally Posted by Latheesh

Came across the reddit sub, but stopped following posts like this "I am 27 years old and current corpus is 5 Crores. Can I retire now, is this corpus sufficient enough to afford daal-chaval for rest of my life?"

I follow that subreddit too and have been for a few years now - I am pretty sure I haven't seen a post like that often. There is always the odd troll here and there but they usually get shut down pretty quickly.


I guess I should stop now becuase I could ramble about this topic for hours but these are the basics.
If anyone is interested I highly recommend reading whats perhaps the best analysis of this topic at https://earlyretirementnow.com/safe-...l-rate-series/

[tc_rides]

Why the income needs to dry up post 55? Can’t there be some passive income for the next 5 yrs? Our dads and mom were mostly fit to even extend their retirements. Most people planning their corpus, doesn’t have a solid idea of what they want to do post retirement. Sorry, if this sounds rude. However, most of these people will fall either into two categories - lead a jolly and merry life doing nothing or, take up something too intense for that age like farming which involves physical labor. Both these idea are detrimental to physical and mental health. I just wonder if we have given a hard look on what exactly we want to do post retirement, if there is ever one like that. People in the west slows down after a certain age, they don’t STOP. What is forcing us, when we should be still young at 55?

[SmartCat]

Related thread:
https://www.team-bhp.com/forum/shift...ng-thread.html (The Retirement Planning Thread)

Originally Posted by pandey.jai

Is this retirement corpus including property or is this just money (cash/invested)?

You can include property into retirement corpus provided you are NOT occupying it. If you have an apartment that has been rented out, you can include that in your networth

[wildsdi5530]

Originally Posted by CarJunki

Best placed are the ones who are retiring from judicial services in India.

I agree. Plus they would have made a corpus for few 100s of crores.

Originally Posted by SoumenD

You miss the most important point about early retirement. It means you stop working, not your money. You should be invested in equity to beat inflation.

Investment in equity to beat inflation could lead to losses. Does a retired person have enough risk appetite to invest in equity?

Originally Posted by SNA411

Isnt 50 crore per year x 30 years = 1500 crore? Unless I missed something extremely elementary.

Actually yes. 50 Cr is for the first year. for the 30th year it would be close to 10,000 Cr per year. I don't know enough maths to do the calculation so I just took a median.

Originally Posted by Transmission

In the long run - 20+ year runs - FDs havent kept up with inflation after taxation ever in the history of India. I have literally crunched this number using historical data from terribly laid-out RBI webpages.

Totally agree.

[SoumenD]

Originally Posted by wildsdi5530

Investment in equity to beat inflation could lead to losses. Does a retired person have enough risk appetite to invest in equity?

Yes, equity exposure is important. But it will be foolish to put all eggs(savings over the years) in the same basket (equity). So one needs to follow a calculated strategy. Again lemme share a link to ‘bucket strategy’ for your reference. Hope this helps

https://youtu.be/GWauf9oBZa8

If you intend to go only with safer debt avenues, forget about 60, even past 70 you will have to keep working.

[allinbalance]

I am 50 years of age and I voted for the 5cr bracket, but with a few riders as explained below.

While it is extremely difficult to generalize this kind of planning due to each individual's circumstances, it is fact that 99% of the working class professionals have a VERY LARGE portion of their savings tied up in illiquid real estate. I believe this is the ONE area which each one of us has to carefully weigh in the overall plan. Too much money stuck in real estate is never a good idea, because selling real estate is not really easy.

My retirement plan is based on -

a) INR 5 cr is in the form of semi-liquid or liquid savings or instruments which can be cashed without too much penalty or cost. I have most of my savings in diversified portfolios through SIP, short term bonds, ETFs, FDs (small part) and PPF (pretty large);

b) Aside the (a) amount, the roof over my head is paid for (already is - since I took the loan at 35 and ratcheted up EMIs every 2 years to use the snowball effect to pay off my 20 year housing loan in 9 years);

c) That my children would be settled by the time I retire in 10 years and not dependent on me (here too started early and my elder kid is already in her 20s and in law school);

d) that my kids education has no bearing on (a) above, since those are paid from endowment policies taken within 2 years of their birth (they are LIC Jeevan Anurag for elder kid and ICICI SmartKid for younger);

and finally,

e) my wife will continue working (she has 16 years of working career left) till her retirement.

Based on above construct - and keeping in reasonably good health and using my retirement to engage in academic teaching assignments, I expect to live out till 80 in reasonable comfort.

[sagarpadaki]

Originally Posted by wildsdi5530

So by my calculations, yearly expenses will be Rs. 48 Cr. and for 30 yrs of post retirement life , Rs. 1.5 Lakh Cr would be an adequate corpus. Thankfully, Me and wife are both doctors so I will probably die with a knife in my hand, so I'm not trying to plan retirement which seems futile.

.

I think your calculation is way off mark.

You should consider only those expenses that will remain with you into the retirement. Some expenses that you have now will not be in the retirement/advanced age. For example - Kids education. So, when calculating the corpus consider only those aspects that will remain into the retirement. Basics like food, taxes, clothing, medicine,basic upkeep and some discretionary spends.

[SnS_12]

Voted for 10+

With the kind off growing inflation numbers we are seeing a annual salary hike offered anything below this number is essentially a pay cut. So, even If one retires with a sizeable amount, would you feel content with your wealth/savings getting eroded over time? Hence, I am sure someone has to continue working and for me I want my money to take that place.

Also, I don't think I can work till I turn 50 even if I am alive as this corporate rat race is really something I want to detach my self from asap. So, If I don't want to cut down from my current living standards and have some peace of mind to even consider retiring I need to have a savings of 10+ to just start off with and then plan my next steps accordingly.

[antz.bin]

My ideal retirement kitty would not be denominated in INR. The day someone has assets over 1 Million USD (in India, in today's money), they can truly think about whether that is enough. Till that day arrives, I would suggest that they keep their head down and keep working to get there.

Our govt will keep making sure that this goal keeps going farther and farther away due to the additional inflation of INR over USD. If USD starts going bust, maybe this will change the target to 1 Million EUR. But this definitely cannot be done in INR.

The average inflation of USD / EUR is about 0.5 - 1%. If I have 'n' years to retirement, Compensating for compounding inflation, one can say the amount for FIRE retirement would be:

1+(0.01 * n) Million USD.

So, if you are retiring tomorrow, your target is $1 Million or about 7.5 Cr.
If your retirement is 20 years away, your amount to target should be $1.2 Million. Whatever that amount might be in INR 20 years from now.

This is how I have set my target for now. I will reassess when I get there.

[AshwinRS]

Originally Posted by wildsdi5530

So by my calculations, yearly expenses will be Rs. 48 Cr. and for 30 yrs of post retirement life , Rs. 1.5 Lakh Cr would be an adequate corpus. Thankfully, Me and wife are both doctors so I will probably die with a knife in my hand, so I'm not trying to plan retirement which seems futile.

This seems very high looking at the numbers put froward by other members, and I should probably do this fire analysis.

I think you're way off the mark! 1.5L Crores could possibly be higher than the GDP of some poor countries.

It seems you've taken the rate of inflation of the last 30 years and directly applied it to the next 30 years. This logic of comparing last 30 years numbers, with next 30 years is flawed, because between 1980s-2000, the inflation rate was 7-13% and today it's somewhere between 4-6.5%, AFAIK.

Historically, all economies go through such a cycle when they develop. And in the next 30 years, India won't be experiencing the same surge in prices (barring a few like fuel etc.) as it did in the last 30 years.

[sukhbirST]

Originally Posted by rahul4321

Age: 37
Profession: CA
Unmarried at present - never planning to marry. Not going to have any kids
Any excess money at the time of my death will be left to institutions caring for stray animals and providing them with shelter and medical treatment.

That's what is called simple, clear and straightforward. Thanks for being bold and brave for your life goals. Appreciate your care for stray animals whom we call nuisance now. Though I have voted for 5Cr.

[dipak1406]

Planning for retirement is a business and people take advantage by frightening you with figures which are crazy.

Our ancestors did not do any such planning. They used to save like crazy (my dad and mom used to make us walk on Sundays anywhere between 6 to 8 kms one way to visit our relatives.) This was just a routine practice no big deal.

But they would spend on education and marriage which would deplete their savings substantially.

Also with Gold and properties being expense saving on these instrument was difficult. Equity was looked down upon by middle class period.

Eg - my dad was earning Rs 200 when we were very young. In 1994 when i started working my salary was Rs 1500, Mom was earning Rs 2100 ( dad expired in 1986 ) and we were living very comfortably - Mom, sister and myself in this amount.

Consultants selling Retirement Plan - they show 6 to 7 percent inflation and if we want to manage our current lifestyle after 30 yrs, we are asked to immediately follow these steps which are common with all of them

a) Insurance - usually Term
b) Mediclaim - usually 5 lacs
c) Mutual Fund SIP - ideally Rs 35000 to Rs 50000 per month

Surprisingly they have agency of all the above and will be happy to become our agent to start all the above.

SECRET no one Tells you - Look at USA / Europe today and you will understand where you will be 20 to 25 years from now.

You do not believe OK - in 1990s inflation in USA was 5.40% and interest rates were 8.1%

Not very far are we on today's context ???

Ok now if we are planning for next 25 years then

- Today's interest rates in USA - 1.25 to 1.50%
- Today's inflation rates in USA - 1.50% in 2021

SILVERLINE - If you invest in equity it will give you 10 to 12% returns and you need to plan for retirement when inflation will be about 2%

So relax as this will bring your retirement kitty substantially down.

Word of advice - ask your children to take education loan if you want to save your future investment as you will loose big time benefit of compounding if you break your saving earlier.

Take care