Team-BHP > Shifting gears


View Poll Results: Retirement kitty in crores
1 13 3.62%
3 40 11.14%
5 99 27.58%
7 35 9.75%
9 16 4.46%
10+ 156 43.45%
Voters: 359. You may not vote on this poll

Reply
  Search this Thread
40,559 views
Old 4th April 2022, 20:16   #46
Senior - BHPian
 
Join Date: Nov 2009
Location: Bangalore
Posts: 1,433
Thanked: 2,036 Times
Re: What is your ideal retirement kitty?

Quote:
Originally Posted by sagarpadaki View Post
I think your calculation is way off mark.
Off by a factor of 1000? I'm still looking at a 15 Lakh corpus. More than what most people here have planned for.

Quote:
Originally Posted by AshwinRS View Post
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.
Again I would say wishful thinking. But even if your predictions are correct, and inflation is half of what I think, still looking at 75,000 Cr.

It's really not possible to plan for a future. Planning a lifestyle 30 yrs hence is just not possible. All we can do is save every extra penny and pray for good support from our children. It may be rosy with govt providing social security for all, from the retirement kitty of all the good people who have saved up, or it could be each for himself. There is no way of determining the socio-economic structure of the future. We just need to look back into the past to know that.
wildsdi5530 is offline  
Old 4th April 2022, 20:30   #47
BHPian
 
SR-71's Avatar
 
Join Date: Jul 2010
Location: 12.97N, 77.59E
Posts: 830
Thanked: 2,217 Times
Re: What is your ideal retirement kitty?

Quote:
Originally Posted by Transmission View Post
I guess I should stop now because I could ramble about this topic for hours but these are the basics.
Useful responses are worth rambling about :-). I would encourage you to share valuable pointers even if it means multiple posts over multiple days. I am sure there is always take away from crowd learning. I had personally voted 9C as that magical number considering my age bracket and my expenses along with some cushion. However close to 44% have voted for 10+ as that magical number. If the primary vote bank for this happens to be the 30-40 age bracket, then I am all good. However if a significant populace who voted for 10+C are form the 40+ age bracket where I fall, then I have to relook at my investment strategy including restricting my next purchase to an Octavia and nothing higher...or should it be the Innova

Last edited by SR-71 : 4th April 2022 at 20:36.
SR-71 is offline   (2) Thanks
Old 4th April 2022, 21:17   #48
BHPian
 
deep_bang's Avatar
 
Join Date: Mar 2007
Location: Bangalore / Boise
Posts: 883
Thanked: 1,252 Times
Re: What is your ideal retirement kitty?

Quote:
Originally Posted by SR-71 View Post
If the primary vote bank for this happens to be the 30-40 age bracket, then I am all good. However if a significant populace who voted for 10+C are form the 40+ age bracket where I fall, then I have to relook at my investment strategy including restricting my next purchase to an Octavia and nothing higher...or should it be the Innova
Same concerns here too. 40+ and targetting 5C by the time I get to 45/48. I hope the 10C folks are saying 10C that's 15 to 20 yrs away.
deep_bang is offline  
Old 4th April 2022, 21:21   #49
BHPian
 
dragonfire's Avatar
 
Join Date: Mar 2020
Location: TVM/DEN
Posts: 50
Thanked: 1,614 Times
Re: What is your ideal retirement kitty?

Uncertainty is a part of life. If you are to take care of all uncertainties that may spring up in future and allocate money for all of those, you wouldn't retire until you die. If you are scared about the future, even having 50Cr in the bank will not let you retire.

The only way you can retire is to accumulate a sum which will allow you to live for a reasonable no of years and then call it a day. See, even if you work until 90 years, there still could be an issue that could arise due to which your salary and savings would not be enough to cover it.

If you really want to retire, please be realistic about it. If you can't, don't event think of retiring.

PS1: Looks like 5Cr is winning. The 10+ option captures everything for 10Cr to a 100Cr. Split that into 11, 13, 15, 17, 19......... etc and you will get the right graph.

PS2: The number should be the amount of money in today's money value. Calculating the future value will mess up with the poll. For example, I plan to retire in a couple of years, while somebody else's plan is 20 years away. Today's 5Cr is 40Cr in 2040

Last edited by dragonfire : 4th April 2022 at 21:35.
dragonfire is offline   (5) Thanks
Old 4th April 2022, 23:23   #50
BHPian
 
Join Date: Feb 2020
Location: Del/Hyd/Pune
Posts: 224
Thanked: 341 Times
Re: What is your ideal retirement kitty?

This poll make no sense actually.. Even 5 yrs back nobody would have thought Petrol will be retailing around ₹120 today. Cooking Gas, Edible Oils and other essentials would cost almost 3 times. The one thing that is most essential for retired people is medicine. And they need loads of it every month. Even medicine prices have increased a lot.

So considering this rate if someone wants to predict prices after 20 yrs, one will need thousand of crores to live the next 20-30 yrs post retirement.

And this is the thought process of the middle class. Think about the poor people who has to think what meal they will have the next day. Do they make any plans as such. Nope. They just take a day as it comes.
souvikjana83 is offline   (2) Thanks
Old 4th April 2022, 23:54   #51
Newbie
 
Join Date: Apr 2021
Location: Chennai
Posts: 18
Thanked: 66 Times
Re: What is your ideal retirement kitty?

1) retire yourself, not your money.
2) kitty / corpus, are just numbers, you will need to be mentally and physically fit.

My kitty = loving wife + educated kids + health

To each his own.
Huzi is offline   (14) Thanks
Old 5th April 2022, 00:46   #52
BHPian
 
Join Date: Jun 2010
Location: Bangalore
Posts: 58
Thanked: 60 Times
Re: What is your ideal retirement kitty?

Quote:
Originally Posted by Sanjeev V S View Post
40X of current annual expenses
I'm involved in equity mainly, and my reading suggests that if you can grow your investments faster than inflation, you can spend whatever you get over and above REAL inflation

The most important question, largely up in the air, is, What Is The Real And Actual Inflation Rate In India?

I have assumed it is Not Less Than 8% And More Realistically 10% - REAL

Whatever you can grow above that figure of choice is yours for regular expenses. For example, if your annual expenditure is 12 L, your Corpus will have to grow @ 10%+12L, i.e., if your Corpus is 6 Crores, it will have to grow @ 60L + 12L, which then works out to 12%. Below 6 Crores will not sustain a present year expenditure of 12L. Anything above 6 Crores today is a bonus as far as 12L expenditure goes

The average Corpus can grow @12%pa if invested in mainly equity. An aggressive hybrid mutual fund is a good example of this very sustainable way of going forward

If you stick to equity, you're guaranteed a very interesting Retirement
SanSabh is offline   (1) Thanks
Old 5th April 2022, 13:38   #53
BHPian
 
Join Date: Jul 2020
Location: Bangalore
Posts: 189
Thanked: 301 Times
Re: What is your ideal retirement kitty?

Quote:
Originally Posted by Transmission View Post
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.
Is creation of a HUF a practical and advised method to reduce the tax burden? With what drawbacks does creating a HUF come with?
MarutiGuy1977 is offline  
Old 5th April 2022, 14:13   #54
BHPian
 
Join Date: Feb 2013
Location: Ahmedabad
Posts: 464
Thanked: 1,593 Times
Re: What is your ideal retirement kitty?

Quote:
Originally Posted by sukhbirST View Post
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.
Thank you. It is very kind of you to say so.
rahul4321 is offline  
Old 5th April 2022, 14:34   #55
Distinguished - BHPian
 
Join Date: May 2010
Location: Bangalore
Posts: 1,886
Thanked: 11,831 Times
Re: What is your ideal retirement kitty?

Quote:
Originally Posted by wildsdi5530 View Post
Rs. 1.5 Lakh Cr would be an adequate corpus.
Quote:
Originally Posted by rahul4321 View Post
No planned investment in real estate or any other long term investment avenues since i have no one to leave it to.
Both such refreshing takes on this topic that otherwise follows predictable trajectories on every financial planning forum/website! Thanks for posting guys!
am1m is offline  
Old 5th April 2022, 14:38   #56
Distinguished - BHPian
 
sagarpadaki's Avatar
 
Join Date: May 2010
Location: Bengaluru
Posts: 4,196
Thanked: 5,759 Times
Re: What is your ideal retirement kitty?

Quote:
Originally Posted by wildsdi5530 View Post
Off by a factor of 1000? I'm still looking at a 15 Lakh corpus. More than what most people here have planned for.
Yeah almost by that factor.

15 lakh corpus for?
sagarpadaki is offline  
Old 5th April 2022, 18:15   #57
BHPian
 
Join Date: Sep 2019
Location: Bengaluru
Posts: 74
Thanked: 209 Times
Re: What is your ideal retirement kitty?

I have been modeling these parameters for a while and hence found this thread extremely interesting.

Quote:
Originally Posted by wildsdi5530 View Post
I think this question can be answered well by 80's kids.

When I was growing up, the family income was Rs. 900/-. Dad was working, 4 family members, own 1984 model Premier Padmini, 2 bedroom house, 2 yearly trips, eating out once a week.

Now 30 yrs later, our social strata has not changed significantly but our expenses are Rs. 1.5-2 Lakhs. Me and wife work. 6 family members, own 2008 Honda City and 2014 Mobilio, 3 bedroom house, 2 yearly trips. eating out (4 people only) once a week.

So I'm inclined to assume that in another 30 yrs, when I will retire, monthly expenses will be around Rs. 4 Cr.

Of course this is assuming that we remain middle class. If we move to a higher society housing/ start eating out more than once a week, or move up in society, shift from sedan to luxury car, then our expenses will naturally increase.

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 guess quite some folks have answered to this, referring to the inflation rate (which is definitely a factor). Assuming 900 pm salary I assume it was 1980s, that makes it about 10k pa..We are about 40 years away. Assuming average inflation of 8% over this period, the salary now should be about 2.2 lakhs per annum.

(P.S, the 8% average inflation is time adjusted, so if you work backwards from 100rs petrol now, you should see about 5rs petrol in 1980, which is what it was, assuming the inflation of 7% in 20 years we should see gas prices at around 350-400 (on a linear line, not accounting all the tech advancements in electric and fuel cell)).

So, if you had lived a lifestyle with 900 rupees per month in 1980, a similar lifestyle should be possible with 2.2 LPA / 12 months = 20k rupees per month. So there is a huge disparity. Inherently, our needs and quality of life have increased over time causing the delta. You might need a lakh crore rupees like you had modeled, if you do have the same growth in your lifestyle as you saw from 1980 to now. More likely you are at the top of the strata already (since expenses is 30LPA, assuming 20% savings + 33%tax you are at 50LPA+ sal) and so growth in lifestyle is not going to curve upwards the same way, and so that modeling might not be apt.

To model such variable parameters, I do not think the goal number alone, (corpus amount) is what you need to look at. We need to look at the end number + the current income. To retire, on a simple check, these are the conditions what we need to go behind:

1. If your corpus can generate the current income (be it equity / debt / real estate / business etc.).
2. If your corpus can grow at the same rate as your income has grown yoy.
3. If you are in a mentally happy state with the current income and income growth (very critical since if you are not, you do not want to consider this as the optimal state for modeling).

With the above conditions, your income can be replaced by the secondary income generated from the corpus and your lifestyle can grow at the same pace as it has been currently leaving you at the same state (barring any new hardships and debts that are to come, which will add more risk factors into the equation, which I am dropping for simplicity).

Say you have sal of 50LPA (with 10% increments yoy), you need a 5cr corpus with a 10% yield. The savings part should generate the equivalent of 10% growth in salary.

Pretty interesting problem to look at and once we start putting in more risk parameters (like FIRE does), it gets more complex.

But one thing I can give it in writing here, if we come 20 - 25 years down and look at this thread, I am sure we will not be in a state needing 1 lakh crore per month (barring God forbid, some crazy stuff like Venezuela or Zimbabwe gets pulled off in India).
warp_10 is offline   (7) Thanks
Old 5th April 2022, 18:29   #58
BHPian
 
Join Date: Sep 2009
Location: Around
Posts: 112
Thanked: 393 Times
Re: What is your ideal retirement kitty?

Quote:
Originally Posted by allinbalance View Post
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.
Username checks out Keep it up
hondafanboy is offline   (6) Thanks
Old 5th April 2022, 18:44   #59
BHPian
 
Join Date: Sep 2009
Location: Around
Posts: 112
Thanked: 393 Times
Re: What is your ideal retirement kitty?

Quote:
Originally Posted by Sanjeev V S View Post
I own 4 apartments in the same complex including the one I live in. I have zero debt.
This is quite impressive. Is this a standalone building you own along with the land or the flats? Based on your experience, any thought to share as to how to purchase real estate without going into too much of debt ? And is it worth ? A lot of articles on the internet talks about how equity is better than Real estate etc.. but hard to find any real life and positive experiences from real estate.
hondafanboy is offline   (1) Thanks
Old 5th April 2022, 23:22   #60
Newbie
 
Join Date: Sep 2013
Location: Bangalore
Posts: 7
Thanked: 8 Times
Re: What is your ideal retirement kitty?

There is no good reason to factor in a 5-7% inflation on 'ALL' the current expenses. For most salaried folks between 25 and 45, 30-50% of annual cash outgo is generally on housing, taxes, fancy wheels/gadgets and kids' education, which needn't be the case in retirement.

The way I see it, there are three major known variables that can throw financial planning off guard during retirement:

1) Housing costs, especially when one rents. While buying a house early on is detested by most financial planners in India, it's a great idea to buy a house early on, especially in emerging suburbs, to lock in a 'fixed' EMI, that's inflation proof (lower interest rates will also drive asset prices up). A housing loan also offers significant leverage at a relatively low cost. Your corpus gets a huge boost if you choose to relocate from a metro to a tier 3/4 town in retirement.

2) Health care. Have more than adequate health cover- the higher, the better. Revisit your cover every 5 years to ensure that your cover is keeping up with the health care costs.

3) Rising education costs for kids. This is one variable that can't be significantly controlled. One option, especially if considering higher education abroad, is to invest in a couple of US index funds/ETFs that will give exposure to growth rates in the US and offer a reasonable hedge against depreciating rupee.

If the first two variables are taken care of, what's left are mostly food, travel, lifestyle and other discretionary expenses. They represent a relatively smaller proportion of the overall spend, and most of them are controllable.

My parents didn't have a stable income and could never afford to do all this planning. Yet, they are doing okay although my mom isn't entirely sure why a meal for two costs over five grand in a fancy restaurant.

I'm pretty sure that most of us reading this thread will have a comfortable retirement and die with plenty of money in the bank
thelonewarrior is offline   (2) Thanks
Reply

Most Viewed
Thread Tools Search this Thread
Search this Thread:

Advanced Search

Copyright ©2000 - 2024, Team-BHP.com
Proudly powered by E2E Networks