Retirement mathematics is a very complex one…and who knows that better than me!
I have refined my calculators a million times and sought help from Pattabiraman (of Freefincal fame)…regarding volatility. However instead of doing a PhD in mathematics, let us look at some short cuts….
1. The American belief is ‘you need to provide for 80% of the expenses at retirement….. ok if your expenses are say Rs. 55,000 when you are 50, the chances are that your expenses would be about Rs. 150,000 at the time of your retirement when you are 58 or 60. I do not agree with this calculation AT ALL….even if this is right, For most people as soon as they retire, their expenses INCREASE.
They start travelling – attending weddings, thread ceremonies, baby shower – with a vengeance! They should be asked ‘what do you wish to do’ – and the real nos. will fall in place…and that is LIKELY to be more, much more than the expenses at retirement.
2. A house in which you live + 1 Million US $….about Rs. 6 crores…now!!
3. the expenses at the time of retirement – annual expenses * 40….so if you are now aged about 50 years and your expenses are about Rs. 1L p.m, chances are your expenses at retirement would be about Rs. 1,75,000 (assuming that is!)* 40 = Rs. 7crores. …see what suits you…most calculators lead you to the 1 Million US $ figure…and if you do a detailed calculation….even more…so START TODAY, NOW!!
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