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Can I Retire with 1 Crore in India – Is it Enough?

By:MoneyChai Retirement Last Updated: 27 Apr, 2019

Can I retire with 1 Crore in India? Is 1 Crore enough to retire in India? The truth is: I don’t know! Why? Because the information provided is not enough to reach to a conclusion.

It is impressive and good that you have 1 Crore in your account before you plan to retire. However, I will need some more data points to check whether this amount would be enough for you to retire in India?

Can I Retire with 1 Crore in India – Is it Enough

The additional validation points include –

  1. How old are you?
  2. Are you married? If yes, how old is your spouse?
  3. Is your spouse working? If yes, would he/she be working after your retirement or are both of you planning to retire?
  4. Do you have children?. If yes, have you saved enough for their education and marriage?
  5. Do you have any other goals like buying a home, buying a new vehicle, or planning for a vacation etc.?
  6. Have you bought insurance plans that provides adequate coverage in case of emergencies? Do you have an existing life insurance, health insurance and personal accidental policy?
  7. What type of an investor are you- Aggressive, Conservative or Conservative to aggressive?
  8. What is your life expectancy?
  9. The most important one- What would be your monthly expenses after retirement in today`s cost? Will your life style be same after retirement i.e. would the monthly expenses remain same even after retirement?

Can I retire with 1 Crore in India?

Before getting into further calculations of can I retire with 1 crore in India, the basic assumption that we are going to make here is that all investments for other goals have already been taken care of – such as child’s education, marriage, buying a house, and so on.

Additionally, let’s also assume that you are adequately covered under the health insurance policy.

Let`s look at an example –

Your Age – 45 years

Your Spouse Age – 43 years

Retirement Age – 45 years

Current Corpus – 1 crore

Retirement Age – 45 years

Life Expectancy – 85 years

Monthly retirement expenses in today`s cost – Rs. 50,000

Inflation -6%

Return over Inflation – 1%

Retirement corpus required – 2.1 crores

This simply means that you cannot retire with 1 crore at this age if your monthly expenses are Rs. 50,000 (inflation adjusted).

However, if you reduce your expenses to Rs. 24,000 per month (inflation adjusted), you can retire with 1 crore corpus.

Now, let’s play with some data points here

Retirement Age – 60 years

Your Age – 60 years

Your Spouse Age – 57 years

Current Corpus – 1 crore

Retirement Age – 60 years

Life Expectancy – 85 years

Monthly retirement expenses in today`s cost – Rs. 50,000

Inflation -6%

Return over Inflation – 1%

Retirement corpus required – 1.46 crores

However, if you reduce your expenses to Rs. 35,000 per month (inflation adjusted), you can retire with 1 crore corpus in India.

Semi Retirement – Is 1 Crore enough to retire in India?

This was an example, where both of you want to retire. What if, I have 1 crore corpus and my spouse will work till I turn 60 and he/she would be able to manage monthly household expenses. What will be our corpus in such case especially when I will not be able to invest anything from now on. Would 1 Crore be enough to retire in this case?

Semi Retirement Age – 45 years

Retirement Age – 60 years

Your Age – 45 years

Your Spouse Age – 43 years

Current Corpus – 1 crore

Retirement Age – 60 years

Life Expectancy – 85 years

Monthly retirement expenses in today`s cost – Rs. 50,000

Inflation -6%

Return over Inflation – 1%

Value of Rs. 50,000 after 15 years on your retirement would be 1.2 Lakhs at 6% inflation.

This has to continue till age 85 of your spouse, around 28 years (Assuming longevity of 85 for this calculation).

Assumed investment return post retirement period is 1% above inflation.

The corpus required for this will be around 3.40 Crores.

Let’s assume that you have 1 crore corpus and you invest in a mix of equity and debt instruments in the ratio of 50:50. With a basic assumption of returns at 9%, value of 1 crore would be 3.60 crores at the time of your actual retirement. You will have a surplus of 20 Lakhs which you can keep for emergency.

Similarly, if you have 1 crore corpus and you invest in a mix of equity and debt mutual instruments in the ratio of 70:30. Assuming a return of 10%, the value of 1 crore would be 4.20 crores at the time of your actual retirement. You will have a surplus of 80 Lakhs which will help you in case of any emergency or for your other goals like vacation etc.

If you reduce the retirement age to 55 here, the retirement corpus required would be 3 crores and value of 1 crore investments would be 2.4 Crores assuming 9% returns. You would be having a shortfall of 60 lakhs.

You can check your retirement corpus here.

Conclusion

Trust me, no one can tell you the retirement corpus before analyzing your complete situation. Your current investments, goals and asset allocation need to considered before reaching to a conclusion. The best approach is to consult a fee-only financial planner.  The charges of a financial advisor are minimal at this point of time. You can definitely afford one.

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Filed Under: Retirement

MoneyChai

Hi, I am Ajay Pruthi, an alumnus of NIT Jalandhar and K.J. Somaiya Institute of Management Studies. I have over 10 years of experience in the field of insurance and have worked with top two private insurance players in the country. I am a Certified Financial Planner and currently working as a Paraplanner with Mr. Melvin Joseph, founder of Finvin Financial Planners. If you liked my blog and want to discuss further on comprehensive fee only financial planning, feel free to get in touch by visiting Finvin Financial Planners.

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Hi,
I am Ajay Pruthi, an alumnus of NIT Jalandhar and K.J. Somaiya Institute of Management Studies. I have over 10 years of experience in the field of insurance and have worked with top two private insurance players in the country.

I am a Certified Financial Planner and currently working as a Paraplanner with Mr. Melvin Joseph, founder of Finvin Financial Planners.

If you liked my blog and want to discuss further on comprehensive fee only financial planning, feel free to get in touch by visiting Finvin Financial Planners.

 

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