Khota Paisa

How Much You Need To Save For Retirement?

Posted in Retirement Planning by khotapaisa on July 23, 2009
retirement tableNote: The expected average return on your investment is assumed to be 10%.

For all those who are interested in retirement planning, here is the table to make life easier for you. The table below gives approx. monthly saving required to cover 20 years of your post retirement life. Please note that the required monthly saving stated in the table is for every 10,000/- of your current expense.
E.g. if you current monthly  expense is 25,000/- and you plan to retire after 20 years, at 7% inflation, you need to invest 10741 x 25000 / 10000 = 26,852/- every month (Refer to the table below for the figure 10741 used here).
The expected average return on your investment is assumed to be 12%.

retirement table

Note : For your calculation, you should preferably use 7 or 8% inflation as this is the average historical inflation as per RBI data.

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4 Responses

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  1. Vivek said, on August 3, 2010 at 9:08 pm

    First, I want to let you know that this article by you is very useful. I googled for information on Retirement planning and after going through this article, had brought in a lot of clarity on how to approach retirement planning.

    I sincerely encourage you to continue to enlighten us on your opinions related to various matters related personal finance. Btw, Are you on twitter yet?

    Vivek

    • khotapaisa said, on August 4, 2010 at 9:45 pm

      Thanx for your comments. I am not on twitter etc.

  2. Vivek said, on August 3, 2010 at 9:10 pm

    Hi,

    Can you also educate us on how did to arrive at the table contents which lists 10741 to be used for 7% inflation?


    Thanks,

    Vivek

    • khotapaisa said, on August 4, 2010 at 9:47 pm

      The calculation was done by projecting your future needs & the amount you would need to save till retirement. It is based on few assumptions like your salary increases in line with inflation (a fair assumption to make even for public sector employees), inflation figures, your projected expense etc.


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