Most people in service take their retirement planning too lightly and think there is nothing to worry.  I hope so.

I see 40-50-60 year olds still joke about retirement, and this I think comes from the following:

1. My parents never worried so much: Sure if they had 4-5 kids, their retirement was always Total Requirement /5 and that was manageable. Also they needed a ‘shoe’ not a ‘Nike’. They needed food, not branded food….so their requirements were less.

2. Their real estate appreciated and they rode the boom: For people who bought a house in one of the cities in the 1960s, 70s, even 1990s – their properties HAVE APPRECIATED. However if the price remains same or actually falls (see the banking data) YOU will not have an appreciated asset waiting for you at the end of life. You will have to create it.

3. The average age of people dying is going up – even though we do hear of many people dying in their 50s – look around you, and you will find many people in their 80s and 90s.

Also the amount that people think that they require for retirement is completely off the mark. Remember if your reflexes slow down, by the age of 75 you may want to keep all the money in bank deposits. This will mean about 12-15 years of NEGATIVE REAL RETURNs AND inflation. Hey your corpus better be 35 times your annual expenses at age 60.

So if your annual expenses at age 50 is Rs. 500,000 pa, assuming it doubles in 10 years, it will be Rs. 10,00,000 when you are 60.

So 35*10,00,000 = 3.5 crs. Rs. + a house + some amounts necessary to replace assets like TV, fridge, washing machine….etc.

Here read on:


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  1. uddenly manmohan Singh woke up and said inflation is at unacceptable level. I trully amazed at this man’s character. Is he really that intelligent as we think?

    This has been going on in the country for past few years and it took many years for him to realise this thing. What is the answer he has for the savers who are f***ed by the governement policy of rewarding real estate brokers at the cost of Aam Aadmi?

    Is he has any plans to bring the real returns for the common man who puts deposit in banks?

    The reason for his sudden realization is this..

    ” Now we have reached a situation where the inflation goes up automatically by 10+ percentage whereas the salary/wage hike is not happening in the same pace. Most of the money of Indian Inc is stuck in real estate as all the companies think instead of doing their core business investing in real estate would be a good bet. Now that causes strains in the system and Rupee value nosedives. In spite of record FII share investments in this year Rupee has reached 55 levels. The share of P-Notes also at record levels. Now this is scary situation for the people who know basic economics”

    “Import bill is increasing hugely due to gold imports as people lost faith in this bunch of jokers who are mismanaging the country’s economy. India has withered some financial sunami’s only because our high rate of savings. Now since that is not there jokers are getting jerky”

    ” Cutting half percentage or even one percentage of interest rates will not revive growth of economy or the consumption boom as these jokers are expecting”

  2. A blogger who claims to write one of India’s leading blogs on personal finance once wrote an article that all retirement calculators which give out large nest eggs to be saved are bogus!
    I made a detailed calculation to show how the math behind this is solid but he was too pig headed to understand.

    Many of his readers believed such numbers are a marketing strategy!

    Many people have a one crore fixation which they think is enough to retire on! Maybe today for someone with low expenses and a well planned investment strategy. Certainly not for tomorrow.

  3. Sir again an excellent eye opener.Many many thanks .This will help a lot of ordinary readers like me to keep our MARCH towards Saving first and then investing in Inflation beating Instruments Like Equity….Some Direct exposure and other through Prashant,Sankaran,Bala in their Flag ship Brands .Many thanks once again.

  4. Pattu both schools of thought exist. If I have a vested interest – an aum based compensation, I will say ‘You have to invest/ save ONLY in mutual funds’- remember real estate, gold, ulips, bank fds DO NOT GIVE AN aum based compensation?

    So if i will require Rs. 7 crs. for retirement – buy a house for 4 will appreciate to 7 by the time u retire, …will that pig headed planner accept? i am not sure 🙂

    but frankly why should it matter to you and me…what money people accumulate as long as we are not COMPENSATED aum based?

    ANYWAY we need lots of different thoughts, that is what makes us a democracy right?

  5. Agreed different approaches can be used. My point is we cannot question the financial math behind the calculators. individual parameters may vary but not the math.

  6. I think most of the current generation expenses are nearing 40-50k on average per month. At this pace they might be needing around 9-12cr of retirement corpus. Build such corpus needs very good commitment.

  7. Thanks Subra.

    Always Subra’s post make me to lose couple of hours sleep 🙂 This foresight most of us ignore to even think about it. But what you are mentioning is absolute truth. I believe the best way to handle the retirement (as per your suggestion) are:

    1) Understand we need huge retirement corpus
    2) Lead healthy life style, exercises, sports, etc.,
    3) Have only necessary expenses and bring down the unnecessary show-off expenses
    4) Insure everything which might jeapardise the retirement goal like life, mediclaim, house insurance, etc.,
    5) Invest one form or another in Equity, start with SIP in MF

    Hope I remember most of the Subra’s thoughts without diluting it much 🙂

  8. Not a bad try Shankar. ‘Huge retirement corpus’ is not really is just that you are looking at it from a long distance…when did u think your home expenses say at 30k a month..ask your mom..if somebody had told her 30 years ago it will be ’30’ she would have said ‘are u mad…that is my husband’s annual income’. That is the power of inflation. That is all.

    Waqt paise ki vaat laga sakti hai….

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