First of all promise me that you will not ASK me how I sat through a meeting which went like this:
Prospect: I will require less money after I retire.
Me: Tell me which expense of yours will go down please? Food, entertainment, doctor’s bill,….????
P: Ok How much will I require?
Me: there are no simple formulae. Try www.freefincal.com it has a retirement calculator.
P: Tell me some simple ways to calculate.
Me: Your age is 53 now, and your monthly expenses are?
P: about Rs. 70,000.
Me: does this include any EMI?
P: yes my Toyota Corolla. The Honda City that my wife and son use is now free of EMI.
Me: Can I assume that Rs. 70,000 will happen even in retirement?
Me: At retirement your expenses will be Rs. 150,000 per month, simply with inflation.
P: Yes, and this does not include an occasional Foreign trip (once in 3 years cost Rs. 1 million) and an annual holiday (Rs. 100,000).
Me. May I assume that your ANNUAL EXPENSES at retirement will be about Rs. 23 lakhs?
P: Yes. Sure.
Me: You will live for about 40 years post retirement?
P: I will retire at 55 and die at 75
Me: How sure of 75?
P: I hope to die at 75.
Me: What if you live like your dad and mom…?
P: well what then?
Me: you will require 40*23 lakhs.
P: that is stress!!
Me: No. That is Rs. 10 crores.
P: My father did not need that much, you are bluffing.
Me: Your dad had very little expenses, no branded clothes, no vacations, no branded shoes,….no eating out.
P: Yes but I can afford it.
Me: You can afford it because you are NOT PAYING YOURSELF FIRST.
P: What does that mean?
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