As I was talking with my daughter Kavya about the importance of making a living doing work she loves, and saving and investing well, she asked a question that trumped me. I was not prepared for it.
“How much is enough, Papa, to live a happy life?” she asked.
Kavya’s question reminded me of a recent post I did about my talk to a group of friends. The focus of my talk was on a few important questions I have tried to seek answers to at various stages of my life, and that have helped me tremendously in choosing a path that, when I look back at, I am glad I chose.
One of the questions that I talked about was – How much is enough?
My answer to that question was a philosophical “not much,” and I gave my reasons for the same. I shared this thought with Kavya too, though I’m not sure if I could explain it well to her.
So she asked, “But how much money is that much money that we need to feel comfortable money wise?”
Well, moving away from philosophy, the question Kavya asked me – about clearly defining how much money is enough – is pretty important.
It is a quantitative question for sure. But, on a deeper thought, the question’s qualitative nature is what makes it special.
It is about how money makes us feel comfortable, and how much of it we need so that we don’t have to worry about it, and so that we stop chasing it at some point in our lives.
As per a survey from Charles Schwab, Americans say it takes an average net worth (assets minus liabilities) of US$ 1.4 million to be “financially comfortable.” That’s around Rs 10 crore. Now, while this won’t be the right number for Indians, given the low cost of living here compared to the US, Rs 10 crore of net worth sounds a good number here too.
Of course, just having sufficient or too much money/net worth, like Rs 10 crore, doesn’t guarantee happiness or feeling of financial safety and comfort. I’ve known people with less than Rs 2 lac annual income and family to feed who live happy and satisfied. And I’ve heard first-hand accounts of a lot of people with Rs 20 crore annual income who suffered from depression.
So, money certainly does not buy you happiness. But importantly, you still need enough of it so that you stop worrying about the lack of it.
Now, when I asked this question to a group of friends (most around forty years of age), one of them replied, “I need Rs 20 crore to feel financially comfortable. That would buy me a good retirement home in my hometown with enough left over to provide annual income for the rest of my life.”
Another friend quoted a figure of Rs 40 crore. “I could then send my son to the US for higher education, and buy a large family home, and invest the rest to be able to fund my household expenses without any active source of income.”
The third friend did not give me a number but his rule of thumb, “Looking ahead from my age of 40, I think I would need 40x of annual expenses as my liquid net worth when I retire, plus 50% extra for expensive pursuits like foreign holidays etc., and zero financial liabilities.”
If I go by this third friend’s thumb rule, if his annual expense is Rs 12 lac, he would be aiming for around Rs 7-8 crore of liquid net worth by the time he retires at 60 or when his active income stops coming in. Which is not a bad number and is closer to the Rs 10 crore number mentioned above.
Now, one thing is sure here. There is no one right answer to this question of “how much is enough?”
But one can certainly arrive at an approximate number using a thumb rule like my friend did, or factors like current age and life expectancy (the longer you will live, the more you will need), current annual household expenses (higher it is now, higher you will need in the future to maintain your lifestyle), number of dependents, expected inflation in household expenses (prices are rising, and will continue to rise), and current and future financial liabilities.
Of course, even the answer that you get from using these variables would be a pure approximation, but it should give you some idea of where you want to reach, money wise.
Imagine entering the Mumbai or Bangalore Marathon only to find they have made a key change. There is no finish line. How will you train for such a race? You couldn’t. How will you know if you’d won the race? You wouldn’t. Thus you need finish lines. Answering the money question of how much is enough will help you know where that finish line could be.
When I quit my job to start Safal Niveshak in 2011, I had two years of annual expenses as backup savings (around Rs 7 lac, mostly in the form of my wife’s jewellery) and zero financial liabilities. I thought that was enough for me to feel financially comfortable then.
In fact, I could gather the courage to quit just because we as a family stopped to ask this question – how much is enough?
We continue to live a frugal lifestyle, but we also spend on experiences and things we enjoy as a family (just returned from a trip to Legoland and buying some Lego toys). Life is too short to save and invest everything for the future, and not spend in the present. You must strike a balance, however.
My advice to my daughter is to get rich just once in life and then stay there – rich enough to not worry about money (though I still need to give her the exact amount) and stop chasing more riches then.
She needs to have ample in her kitty, but only that much that allows her the privilege of coming off the hedonic treadmill (if she ever decides to get on one).
What about you?
If you have given it a thought, how much money is enough for you? How much would you need to feel financially secure?
Please share in the Comments section of this post. Your thoughts may help others who are confused.
Hi Vishal
The part where you compared happiness of 2 lac annual income family vs a 20 crore annual family is so very true.
I think ‘assets’ in the balance sheet of life also mean not only the cash in hand but the relationships that have been forged with family and friends as that is invaluable and somethimes that is also ‘enough’ to get through adverse situations.
Regards,
Rahul
Very well-said!
“22 times the annual income you want to earn when you retire.” (Link)
Vishal,
If you look up ‘tim ferriss tmi calculator’ it will give you a handy tool and template to arrive at your total monthly income.
10 Crore and 20 Crores are too high ?
For eg:- 10 crore is a kitty that can be built when 1.5 Lakhs is invested every month for around ~15 years are 12+% ? Is that feasible ?
Another approach would be to have target to reach 1 cr. by next 10 year and than let that money grow till the time You retire let’s say another 20 years. The money will grow about 8-10 cr. With the Anual return of 12%.
Power of compounding.
Hi Vishal,
This is a hard question as we don’t know our finish line (our life expectancy) and also how healthy our life will be.
The major costs in one’s life will be Housing, Education for Kids, Marriage costs and on Health.
However, once the above is known , then it won’t be difficult to arrive at a figure. In my opinion, 7-10 crores will be more than enough if a person has his own house.
Regards,
Amit
Im working towards the following goals
Financial assets ..25 times my annual expenses ..translating to 2.5 crores
Real estate..3 to 4 crores ..that gives me 5 lakhs rental return
Hi Vishal – in my view, the answer to “how much is enough” is the holy grail of all personal finance questions. I think this number changes at different points in life. What one would consider enough at age 25 would most probably be different from what one considers enough at age 40. Having said that, I think the key issue where most people (who haven’t necessarily applied their mind to personal finance) falter is how inflation (negative compounding) can really screw up things in the long term. I am reminded of something from Poor Charlie’s Almanack where he says that one of the best hedges against inflation is to limit your material needs. All in all, I think anywhere between 30-35x of your expected annual expenses should be good to get off the hedonic treadmill (assuming around 7% inflation and around 12% return on your savings). Add one time expenses (kids’ education, marriage, other financially large expenses you wish to make). The most important thing, however, is to then stop comparing yourself with others who have a higher networth which you could have had, had you not stepped off the treadmill. This is more easily said than done and rarely happens. 🙂
Hey Vishal.
Good Evening!
Every post of your Safal Niveshak is a real gem found in the pile of dust which
gives a life learning lesson for future generations to educate themselves which you
don’t find in Any best school or colleges. It makes my day to move in to the direction of
How to Succeed mode of journey along my path.
Have yourself a Wonderful evening! and keep shooting nugget posts!
I will be retiring in 2020, so had given a thought How much and also to last How many years..
But am still not able to get definitive figure as there are so many things still to be done like…
Marriage of my elder son , Masters studies abroad of my younger one , His marriage also.. What about our future Medial expenses and How much…
So finally have decided .. to continue my method of investment and that is 100% in Equity all the time. With all the learning & experiences, mistakes of last 20 years in the Indian Market, I am very sure of managing good returns which will take care of all my above questions.
I may need to divert some more investment from Real Estate to Equity as it is more liquid (now T+2) and have to go for more good quality (management+Balancesheet+Growth)
and have to have conviction to pass through difficult and volatile times in market.
Hi Vishal,
I have target to reach 1 cr. by next 10 year and than let that money grow till the time I retire which is another 20 years. The money will grow about 8-10 cr. With the Anual return of 12%.
Keep on writing … your posts are really good and have lot of insights.
Manish
Wonderfully written as always Vishal Sir.
Whenever I have pondered over this question – the answer has always been a function of two variables: a) Ability to face Uncertainties and b) Contentment/Inner peace.
The mind is capable of conceiving a myriad of thoughts when we start to think of the uncertainties which can derail us from our plans in the future. The uncertainties could be under-estimating the quantum of investments/savings required to lead a decent lifestyle, investments which may be disrupted by new innovations, maybe the monetary system collapsing under the debt spiral and rise of alternative systems/global order, etc. (My mind can get a bit dramatic :). )
This would imply we need a margin of safety (a premium in this case) over what we may estimate to be a sufficient amount after using the rules of thumb such as those mentioned in this article. The margin of safety will also encompass qualitative aspects such as – having a well-diversified portfolio (hedges against the monetary system such as gold and property, which makes it more anti-fragile in the face of global monetary system collapses); a focus on continuous learning; and finally continued efforts to maintain good physical+mental health and building the necessary grit to face challenges in life. The above qualitative aspects along with a quantitative premium (say 50%) over the rule of thumb estimated amount, should make us comfortable.
Once we trust the world to be better off 50 years from now, self-contentment then is the key variable. Self-contentment is key to maintain our inner peace in a world which is always racing. An extension would be staying grateful for all that we have on an absolute and relative basis. Once our basic necessities and fear/uncertainties are largely taken care of – ability to focus on what we love to do, and improving our own inner scorecard will help us maintain sanity.
There is no perfect number for sure, but taking care of the above two variables to a good extent should allow us to sleep well.
On a side note – it makes a lot of sense why the Rajas in yesteryears used to gift gold, land and cattle. Land provided with a place to stay and enough farmland to grow food/fruits/vegetables. Cattle provided for milk and manure (fuel). Now that sounds like financial independence along with sustainable living :). Once these necessities are taken care of, people could pursue what was really important (at least back then) – Mukti.
Well articulated reply to a well written Article.
Thanks Amey !
Hi Vishal,
Thank you Vishal for an very important subject. I am still trying to find the balance between saving enough and enjoying life. Hope to find the answer to “How much is enough” sooner than later.
It is an interesting debate. I have recently left a Very senior level position in a MNC at age of 42. My computation summary is as below
1. A debt free home to stay and a car to drive
2. 25 times of annual expenses (try being liberal while computing expenses). Include all expenses like Vacation, Gifts, Discretionary expenses etc (not just must have)
3. Depending on your appetite for risk, Invest about 30%in bonds and debts and balance in equity.
By logic , 4% of your kitty is your expenses and over long term the returns on the investments made will be northward of 10-12%. While , inflation is a factor, it is not a straight arithmetic and in long run the delta returns and timing will take care of it.
For example my Son is 10 years, in about 14 to 15 years he will be independent. However, when we compute we compute as if these expenses (school fees to kids expenses) last for the next 40 years. We also assume “zero income”. The reality is we are likely to have some income, while we Persue our passion (say writing, teaching or whatever), we may have some income. These upsides will take care of inflation
In my case, we wrote down expenses line item wise for a period of 12 months to assess a pattern and establish the likely expenses. A few key things
1. Have a good health and life cover
2. Keep couple of credit cards as back up
3. Keep 6 months expenses as emergency money
4. Cut down any “nice to have” expenses.
The last but not the least, I’m amused at the positive quality of life I’m enjoying for the last 12 months.
I plan to do the same at ~40 (4 years to go), share your thoughts on how additional income can take care of inflation.
My math and gut based calculations also lead to a 25 * Forecast Annual Expenses + a decent house, the same as what you’ve suggested here.
The volatility in returns and chances of capital depreciation is what it a tough decision to make.
It’ll be interesting to speak with you and understand you’re going about after taking this decision.
Excellent article ..I was thinking the same ..I have zeroed in on 1 mio $😊 worth of liquid assets like cash equity and debt instruments ..Not considering house land jewellery etc..I am no where close to my fig ,😁😁
In a kind of humor way, You have mentioned my condition and maybe others also. I have made a goal based on my personal expenses. I have set targets also like kid’s education, marriage, health care, etc. I am no close to my figure and it may take > 20 years for me to achieve the same.
My best friend, David Roth, who past away several years ago gave me the answer to this question. Here it is :
Every person has a certain lifestyle which they want. Some want a Van Gogh on their wall others simply want a simple roof over their heads. There is an amount (adjusted for inflation) that you must place in an interest bearing risk free instrument. Once that base amount produces sufficient interest free of taxes and other incombrances, to provide the life you desire, then and only then are you free.
Luis Suarez
I think this question is relevant only if you want to retire early otherwise, it is irrelevant. You can keep earning till retirement and keep doing goal based investing and you should be fine. Even, if had to retire early, then, you should be able to manage with your accumulated wealth.
Hi Vishal,
I love the way you have been able to guide your life by asking right questions.
I also tried doing the same but things did not pan out the way I had expected or wanted. So this brings to element of ‘luck’ while planning the financial goal. One may think 10 cr is good but :
Luck may not be on his side and he needs to plan for higher amt
Another aspect to be considered while figuring out the goal of 10-20-40 cr is by what age will one be able to achieve it. If the answer is 60+,then possibly the goal is incorrect and one needs to re look at may be his expenses so that he can retire early and live life rather than continue working to earn(unless V r talking about tap dancing to work).
If the time frame to achieve financial freedom is age of 60,One variable people can consider is possible relocation to a smaller place with lower expenses. And then maybe their goal may change or become achievable at early stage in life.
Regards
Sourabh Jain
The Monk and the Minister Parable:
Two close boyhood friends grow up and go their separate ways. One becomes a humble monk, the other a rich and powerful minister to the king.
Years later they meet up again.
As they catch up, the minister (in his fine robes) takes pity on the thin, shabby monk. Seeking to help, he says: “You know, if you could learn to cater to the king you wouldn’t have to live on rice and beans.”
To which the monk replies: “If you could learn to live on rice and beans you wouldn’t have to cater to the king!”
Quite interesting story.
I wish I could stay on rice and beans (like the monk) and not have to cater to anyone in my life.
I wish…..
There are many variables one need to account for e.g 1. At what age do you want to retire? 2. How far are you from that age? 3. What is the current corpus you have, excluding a house if you have one where you want to live 4. What is the life expectancy you plan for – I suggest 90 years given medical science’s impact – this is a plan and not a prediction as some of us will leave earlier and some would even cross this benchmark 5. What is the return you would get on your investment now (while you are earning and can invest in equity freely) 6. What is the return you would get on a relatively safer portfolio (some debt added in) 7. What are your expenses now 8. What inflation would you expect on each expense line (averaged to a total weighted average) – apply this for your future expense prediction 9. Look at last 20 years stock market monthly closings (available online) and assume your equity portfolio would mimic the same pattern going forward (till 90). 10. Apply a dampner on these returns assuming the stock market would cool down over a period of time as India’s growth rate reduces after a decade or maybe more – this would need to applied in a shorter time cycle (Monthly adjusted returns)11. Find the average returns pre and post retirement by weighting each investment type with its own predicted returns 12. Apply the growth to your investments (which would be your current corpus plus monthly savings while you are earning and only the corpus when you retire 13. Calculate the left over corpus after inflation adjusted expenses and monthly adjusted returns on the corpus 14. Play around with the variables to find out till when would your corpus be a positive value (keep a buffer if you want to be safer) 15. You can retire at the age where the corpus at 90 years still leaves something positive at the end. 16. For kids and gifts/estates you want to leave, factor them out of your corpus as it is today at today’s values instead of predicting something 40-50 years down the line (Not likely to be accurate or useful for the recievers of these gifts
Hi vishal,
I am reading most of your articles for the past three years and I am thankful for the wisdom u instilled by your articles.
In my opinion,
Between work and retirement there can be a phase of RETYREMENT.
I mean, you get a corpus of say 3-4 crore rupees say around 40 years apart from your house and jewellery, get out off the fast track, be in a semi retirement phase for say 10 years or so . This 10-12 years of work will allow you to lead your life on a monthly basis , at the same time allowing the corpus of this 4 crores to grow to 10 crores unhindered. Then maybe you can retire around 50-55 years completely. If the life expectancy is kept at 85 years , you still have a retirement period of 30 years or so . This is my personal opinion and I welcome your comment on this.
Again a big THANK YOU
I’ve been richer [ie. more projected $$ to live by] and then been much poorer [ 2000- 2010] due to the stock market movement that ravaged my projected “wealth”. What I learned is not to get into a deep depression, but continue to work in what I love despite the “unglamourized” nature of the work and the lack of big salary from my office worklife – I became a gardener full time and love it tremendously. I have a Ph.D.
We live frugally but with no lack of comfort and joy. We don’t inspire to hoard money but to save it wisely for things we truly cherish and need in old age [–healthcare].
The lesson here is when we get into competition with our friends or neighbors to be ” richer, more conspicuous consuming without regards to the environment” – we lose our perspective of life. More stuff or more digits in the banks does not mean more joy, peace or contentment.
One has to search for one’s own level of “ENOUGH”.
Well said !! Contentment is always the key and the pathway to positivity.
Rupees 10 crores after 20 years from now should be a decent sum for retirement.if it is in liquid money in banks fd,mf and liquid funds on average of 8% return can fetch 80lacs income per annum which should be enough for most of the indian families with 4 members of family to be taken care of .
I am not including grandparents as I am assuming that they are self dependent.
8% after 20 years in liquid fund ? Isn’t it on ambitious side.
I think 30 times of annual expense + money for any one time big expense (Child higher education)
Strongly recommend moving to a low cost location, you get less pollution and better opportunity to serve under privileged
Assumption :- return from investment will be 2% higher than retail inflation ( Need to avoid life style inflation)
The biggest risk to a finite nos to the question “how much is enough” is medical bills. Currently I am personally going through a situation where for the first time I consumed my entire year of income (vs avg savings of 30-50% in the previous 16yrs of job) and in all probability will start dipping into my savings…if the run rate continues, may be in 10yrs I will done with my savings which till 2yrs back was a number i thought i am good with till I die…
Atul Gawande in his book “Being Mortal” mentions that a survey done within a group of poor people indicated 80% of the sample mentioned that rising medical bills for one of the family members either in the current generation or in the previous one forced them to poverty levels..
A Country like India where perceived Inflation is in double digit and medical exp has no cover, a finite nos will be moving target depending on state of health at various age levels…
If only the essence could be captured so beautifully ( including transcript)by the mind , if only we were so level headed to think so calmly.
I don’t know how much is enough or when to slow down but mere thought of not participating in never ending race is so impactful. Hope to cross over FI by 45.
Gratitude for these 2 wonderful articles
A rough calculation would be to have 9 months of expenses in cash equivalents, 33 times your annual expenses invested in diverse assets, plus a home (and zero debt).
You withdraw 3% of your investments which should last till perpetuity (*if* past performance holds).
However the real wealth would be your own capabilities and social capital. They can always be converted into *enough* wealth to get by.
Retirement- It’s not a stage for one to stop working, rather its a very productive stage that one seeks to stop working on the meaningless jobs ( that most of the middle aged work in lieu of money- can call it ‘dehari'(sic) in crude language) and aspires to pursue one’s dreams ( and when you do what you like the most, you end up earning even more)!
A decent home ( that you can feel good about); 10 cr. of liquid-able assets ( what you can redeem at a short notice- clubs MFs, Equities, Bonds, FDs, etc); a ‘high value skill’ that you have attained ( and love); warmth of your family and healthy hues!
Any day I attain this all, I will consider myself retired from ‘ working for others’.
True!
The concept and reality of death will go for a toss in our own lifetime. Guys who are planning with 90 years of life span in mind will be in for a rude awakening very soon. You must at least plan for a 1000 year lifespan. I for sure am going to live for 1000 years as I do Yoga everyday.
Well Vishal i believe more than the number one should love the process of earning money by legitimate way and just making sure, you stay ahead of inflation all the time and that should take care of everything. My wife calls me Greedy abd i dont mind it as its a driving force to do what i like again being legitimate and making sure money is a by product of it
It was an good and quite complicated article Vishal ,
There are some things in this world that are not meant to quantify , and this is one of those things other than words like Success , Happiness , love etc. And after your retirement it depends on yourself what’s is your living expenses and include if you have any kind plans for vacation. And being happy that matters most , it’s not only vacations that bring oneself satisfaction and happines but spending time with family , and that matters .In the end being in peace and harmony with inner self is happiness and no money can buy it.
I don’t understand how one ‘can get rich once and stay there’. How do you define being rich ? One person’s definition can differ from another’s. How can one ‘stay there’? One has to accept that life has its own plan for each one of us, including all the ups and downs. I think any definition of ‘Rich’ will have to be in this context. Further, it will be very difficult, if not impossible, to put a number. One will certainly need to plan, but understand the context and its (planning’s) limitations.
I just turned 33 and even more recently have just put in my papers from a senior position in an MNC after asking the “how much is enough” question over and over again for the past 1 year.
My Comfort List is as below
1. a debt free home
2. financial assets worth 22 times my annual expenses
3. a one year emergency fund
to meet expenses and keep up with inflation (assuming 6-7%) would need to generate returns of 11-12% even if i do not earn a single rupee my entire life without ever denting capital. this seems to me a goal that is achievable.
If one is asking this question, I would presume that work life and home life are vying for each others time and home life is loosing out more often than not. In such cases the most important non-financial criteria, is having your immediate family on board. Living off a fixed sum of capital (unless obnoxiously large) will always puts limits on spending, which takes some getting used to.
Generally, 25x to 40x of annual expenses is a good starting point to plan for a happy life. There is no end to gigantic thinking; but for an average person who wants to live a full life and spend time with children and family, 25x might look a decent proposition.
Good points. I am sure many in the age around 40 will have this question . I was thinking about this question for a while . I am sure professional planners would have some tools, but I created a simple excel file where I added current value for various expenses and extrapolated to various time period by applying some % inflation. I considered is household expenses (till my wife reaches 80), school education fees (till kids reach 12th std) , higher education expenses (one off), marriage expense (one off) , car buying (New car every 7 years ), travel expenses (for next 30 years because we like to travel a lot ) , Miscellaneous ( one in 2 years , just in case ) . I applied various inflation indexes to all and extrapolated future cash requirements. Then I converted it to present value (again some conservative asset appreciation rate) . With my figures my calculation showed 6.5 CR i.e I need around 6.5 cr if I have to retire today. People should be able to put some tools available on net OR can do themselves . The numbers and categories you put in is your own number and assumption. You should be able to come up with some number . I have debt free house and no other debt.
One point though , if you ask advisors , they will advice you to invest in MF and say that it will give 15% return . I don’t buy into that . If I have to take a retirement decision , I would rather be on conservative side .
Being said that what this will give you is a number. To actual retire or not is driven by other factors too.
Hi vishal I have a debt of 11000.00 debt and another 2000.00 but my asset is my condo paid off, so
how am I supposed to take care of my measly salary of 20,000 and my wife
,s 30,000.00 how to calculate and bring extra income to have a decent lifestyle, is there any formula to reset my income or earn more? what you think can you throw some ideas? I will really appreciate it.
Hi friend ,
There is no amount of money that is enough …. Money itself is a big scam.
You can never tell your daughter , how much of money exactly is enough !
I have been a trader since 2003 … I know how to deal with money through many loss and gain… I never invested through fund managers who give false promises and eats on my money … Loose to win is the only way here. If some tell me , their fund will give me huge return … I politely tell them , “then surely you do not need my money , invest yourself” lol.
Financial market of investments and investors are full of glitches …. Full of predators….
First education is put into our brain to crave for money , to start with a piggy bank , and completely evolved as a sophisticated client of the financial products , presented to us through cleverly orchestrated “success and failure in life” idea till we die.
Your first philosophical answer could satisfy your child more than displaying how many numbers one can accumulate in the bank accounts before retirements.
“Abhab Pratyalambana Vritti” as Rishi Patanjali said …. Is a quality that without having any specificity , a sense pours out from consciousness establishing “lacking” of something.
Such as , the sense of lack of money , lack of knowledge , lack of peace , lack of love , lack of this and that and lack of SECURITY.
All of these senses are purely imaginary ….. It does not matter how much money one have , be it 10 lakh or 10000 crore …. One will surely die lol…. And in death all becomes equal , be it rich or poor….
In short , no money is needed to live life …. Only satisfaction in what you have is needed to live a life ….
Quality , quantity , luxury , medical flexibility are all human nonsense …. All are ideas …. Drop all…. Be free…live free … Die free .
Bows friend.
I am 73 years old having two daughters married & settled having their own kids. I am having my own house. How much money is required for me & my wife to have comfortable living for my test of life.
How much money is enough.This is a typical question.
It depends upon ones character, how deals with the money and both husband and wife plays an important ro;e in the running of family as well as life. If one achieves contentment and a person with a mould of character who gives less importance to money can lead a life satisfactorily without comparing to the others and society. This is my practical adoptment in life.
I think about this often. I am ~36, want to retire at 40 (salary or money shouldn’t be the motivator thereafter to leave bed every morning), and given the long life expectancy now, it’s hard to confidently fix a number I’d be ok with. I guess 2Cr each for my daughter’s (only child) education abroad, medical expenses in old age, and a home seem reasonable. Add to that world travel (say 1cr), luxuries like a high-end car 2-3 times (say .5 cr), and then enough capital to fund daily expenses (let’s say 2L/month). At 8% average return, that amounts to 3Cr. Add a buffer for inflation (20%), and you get to 13 Cr.
Returns are hard to predict though, and volatility is scary when you’re not earning new money. If you begin any business or in equity investments, there’s a possibility of loss of capital too. That’s what makes this math tricky.
I guess one has to come to a reasonable figure (my gut says 10Cr +a house), and be convinced that you’d do some productive activity even post target retirement age to solve for buffers and contingencies.
I’d love to hear back your thoughts on this.
Cheers
too good, thanks for sharing
Good article. Everyone thinks but answer is not easy. Because our desires are not constant. Everything is changing, our thoughts, life, all our surrounding. So I should do our work (Karma) always, and whatever we get, we should be content, and we should use rationally our money. Thank you 😊
With regards.
Mohan Lal Tejwani
I am 59 yrs old . Will be retiring in 3 yrs. At my retirement age of 62 Yrs I will have a corpus of 5 cr . and pension of Rs 70,000/- per month. Only one liability of daughters marriage. I have a simple life style.
Will this 5 cr will be sufficient for me and my partner to live for 20 more years ?