Sadly there is not enough research on the financial behavior of Indians. On the other hand there is a lot of research in the US about American earning, spending and investing pattern.
It is NOT possible to just do a cut n paste of the American behavior patterns, and THEREFORE one cannot just accept the ratios as it is. For example the Americans have what is called ‘Social Security’ which is available for them post retirement. This may not give them a great lifestyle, but it surely pays much more than the minimum amount required to get by. So if an American does not save much for retirement, he will still get by.
The average American has something called a ‘Reverse Mortgage’ – by which he/ she can give his house as a security and hope to get a monthly amount (the reverse of a regular mortgage is called a reverse mortgage) with which to live.
Similarly the average American has a much, much higher standard of living compared to the Indian middle class. Everybody has a car, a house, etc. and it can be assumed that this standards they will have to maintain even into their retirement.
I just brought about these differences to tell you that American literature (or research) should be used very carefully. So when somebody tells you:
“If you save 10% of your salary, that is good enough for retirement” – remember this is an American statement. In India you may require a higher (or lower!) amount depending on:
Where you plan to live
How many people you plan to provide for (dependent sibling, parent, etc.)
Do you have an indexed pension (only Central/State government employees)
What life style do you plan to have?
Will your children be able to chip in IN CASE you have a cash flow problem
…so please take the American research with a sense of Indiannesss….
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