HOW MUCH DO YOU NEED TO RETIRE?

Use The 30% Rule!

Ask this to Quora, or Google, and a list of numbers will pop up, mostly between $1 million and $2 million. Of course, there are people who retire with less than that, and they make it work.

I would suggest, stop thinking about retirement in terms of absolute numbers. Because, it varies individual to individual, depending on his or her current cost of use-to-lifestyle.

List your current expenses to understand the current cost of use to lifestyle multiply it by 10 (inflation rate).

Let’s do an example.

Let’s say you are fairly well-to-do, and your current expenses are approx. Rs. 1,50,000/- per month. This means you will need Rs.15,00,000/- down the line 10 years to live a comfortable use-to-lifestyle.

You probably think that number is too high, and if you really want to spend less money, cut down on your avoidable expenses.

Retirement_Plan1

The 4% Rule

You have probably heard of the 4% rule, which says you can withdraw 4% from your retirement savings annually post-retirement. So if you have 1 cr, you can take out Rs. 4,00,000/- a year. Simple enough!

Do the math with your expenses to understand how much do you need to invest to live a comfortable retirement life. If the numbers don’t line up, you’re probably going to have to make some adjustments or you need to start thinking of speeding up with your retirement investments.