How Much Money Is Required To Retire In Peace?

Did you know that you need to start your retirement planning as early as ‘now’? When you start your life as a worker in some company, your burnout will only start healing once you retire. Retirement comes as a stop to your life of routine labour. Therefore, a lot of people look forward to retiring in peace and comfort. Retirement is a financial goal where you have to save a certain amount of money so that you can spend the rest of your life without having to worry about making more money.

A lot of people do not really think about retirement because they are focused on making money and climbing up ranks in their current company. Other than this, you have further goals like buying a house, or studying, etc. Therefore, there is no support for planning retirement as the world strives for a workforce, and not a retired section.

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Retirement is actually not about how much you have earned in your work life. What matters the most, are your savings. Therefore, when you start earning, you must keep some money aside as savings. Initially, the money might seem a lot compared to how much you are earning. However, once you see an increment in your salary, the money you were saving remains the same but the pressure of keeping that much money aside becomes less.

How do you plan your retirement?

• As already mentioned, start saving early and plan how much money you need to survive in the ever-changing world.
• Since the living costs are increasing every day, you must keep revising your retirement ideas to fit the changing patterns.
• No matter what happens, try to keep your hands off your retirement savings.
• Fix a budget for your retirement and save up that much money no matter what. So how do you save that much money?

How much money should you save?

There are a lot of factors that play into determining how much money you need to have by the end of your work life. The following factors are a rough estimate of the different things you need to keep in mind while planning your retirement and your retirement budget.

• Current Age: This is necessary to understand when you will retire and how much you are going to save until you retire.

• Current monthly expenses: monthly expenses determine the amount you will spend every month until you retire.

• Your life expectancy: we never know how long we are going to live. However, keeping a rough estimate will help us determine how much money it is that we are going to save. India’s life expectancy is around 70 years so we can use this average for our calculations as well.

• Retirement Age: This is the age you decide to retire. It’s very subjective and depends on when you want to stop earning.

• Expenses after retirement: it’s a belief that after retirement you usually cut down on your expenses by a small margin. You can tweak this according to your predicted expenses post retirement.

• Inflation Rate: The prices are increasing periodically, and your expenses today might not be your expenses after, say, 20 years. Therefore, it’s very important that you keep in mind the increasing prices and plan your retirement savings accordingly.

• Retirement Period: This term refers to the predicted years you will be alive post retirement. This is calculated by subtracting life expectancy from your retirement age.

• Years till retirement: This is the total number of years you have to wait until you reach your retirement age.

• Value of monthly expenses after you retire: The value of monthly expenses after you retire is the total amount of money you will be spending after you have retired. Say that you are 30 now, and you plan on retiring at 60. So your value of monthly expense is the money you will spend, each month, after 30 years with the inflation rate included.

• Return on investment: the return on investment is the percentage of interest you will get on your money saved. This differs across savings methods. FDs will give you a lesser rate of interest than when compared to equity or mutual funds.

• Corpus needed for retirement: this is the total amount of money you will need after you have retired to sustain yourself for the number of years you are in retirement. This is calculated by multiplying your yearly expense, post retirement, by the retirement period.

Let us put it in a table format, with an example, to determine how much corpus one is going to require with the following credentials.

Current Age	25
Current Monthly Expenses	Rs.25,000
Retirement Age	60
Retirement Period	15
Life Expectancy	75
% Of Expenses after retirement	80%
Inflation Rate	8%
Value of monthly expenses after you retire	Rs. 2,51,377.41
Years till retirement	35
Return on Corpus	10%
Corpus needed for retirement	Rs. 3,77,78,222.55

Factors like pension can also affect this table*

(Table Credits: CA Rachana Phadke Ranade)

Therefore, you will have to start saving according to the above-mentioned factors if you wish to live a life that is comfortable and stress-free. Plan as early as you can, and give equal emphasis to your regiment planning as you do with other future plans.