Retirement planning should be one of the most important goals of everyone’s life. But unfortunately, in India, we postpone provisioning for the same, for the sake of other goals. Still, child’s education and their Marriage planning are on the top of the list of individual’s goals. We sideline retirement planning for many years.
As per trinity study and SFR (safe withdrawal rate). It says you need approximately 25 times of your annual expenses invested equally in stocks and bonds. This will serve your expenses for forever – as long as you limit your withdrawals to 4%. This approach has worked for centuries and likely to work for you as well. With this in mind, let us look at your situation.
Here I am talking about middle-class family person who earns 40-50k per month.
Your expected expenses after 25 years.
Your expenses today 20000 rupees per month.
After 25 years with 7% inflation = 1.08 lakhs
Yearly expense after 25 years = 1.08*12 = 13 lakhs
Expected capital as per Trinity study
25 times of 13 lakhs = 3.25 crores
Now how reach 3.25 crores?
if you save 19,000 per month SIP with 12% yearly interest rate for the next 25 years.