How Much Money Is Enough To Retire In India? Here’s How To Calculate It
3 min readFor 20-30 years of our life, we put in a lot of effort to earn our bread and butter, and live the life we want.
And after all that, we all want to retire and live a carefree life, right? But for that, you surely need a financial cushion in the form of retirement corpus. That is exactly why it all boils down to how much money is enough to retire. Is it Rs 50 lakhs, Rs 2 crore or more? Well, the answer and amount would depend on your lifestyle and finances, which is why it differs for each one of us.
So how can you figure out the amount of money that is required, and perhaps enough for you to retire? Lets find out how to calculate that.
How To Calculate Retirement Corpus?
retirement calculator /istock
A relatively easier way to find out your retirement corpus is by using a calculator that SEBI, which is India’s market regulator, introduced some months ago. SEBI has a calculator on its website that can assist you in determining the necessary retirement corpus that has to be accumulated for you to retire comfortably.
The retirement calculator’s contents and format are provided here to assist you in determining the corpus amount needed for retirement after accounting for your age, inflation, years until retirement, present monthly and annual expenses, and other factors.
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Also Read: IIT Bombay Graduate Ready To Retire At 29 After Working At Google
Which All Factors You Need To Consider During Retirement Corpus Calculation
1. | Current monthly expenses that will persist in retirement | |
2. | Annual expenses that will persist in retirement | |
3. | Total average monthly expenses (annual/12) | |
4. | Inflation before retirement | |
5. | Current age | |
6. | Age you wish to retire | |
7. | No of years you expect to live | |
8. | Years to retirement | |
9. | Monthly expenses in first year of retirement | |
10. | Years in retirement | |
11. | Inflation during retirement | |
12. | Post-tax average return from retirement corpus | |
13. | Total Corpus required | |
Post-tax return (used for current and future investments) | ||
14. | Post-tax return expected from equity investments | |
15. | Post-tax return expected from current taxable fixed income | |
16. | Rate of return expected from current tax-free fixed income | |
Present Value of investments | ||
17. | Value of current equity invesments | |
18. | Value of current taxable fixed income investments | |
19. | Value of current tax-free fixed income investments | |
20. | Lump sum benefits expected at retirement | |
21. | Current monthly mandatory EPF contribution (employer+employee) | |
22. | Annual increase in this contribution (be realistic) % | |
23. | Expected rate of return for EPF or NPS % | |
What Is The Concept Of FIRE In Retirement?
retirement calculator/shutterstock
Nowadays, a concept that you might have heard of quite often, is FIRE. But fear not—the F.I.R.E. movement, or “Financially Independent to Retire Early,” is what we’re talking about over here. Being able to retire as early as their 30s or 40s is a goal that many millennials and Gen Zs are working towards nowadays.
The goal of the FIRE concept, which is more of a lifestyle choice, is to become financially independent and retire early by setting aside a sizable amount of money for investments and savings.
The idea that there is no such thing as a free lunch is among the most crucial lessons we learn early in life. However, the FIRE movement gives you the tools to push yourself early on and enjoy longer periods of time in retirement without having to work tirelessly. With this FIRE objective, they hope to save enough money to retire in 30s or 40s instead of late 50s or by the usual age of 60.
Also Read: 5 Signs That You Are Financially Ready To Retire Early
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