How much Money is enough to never work again in India?

I don’t think there ever will be a definite answer to this question. There are lot of binding factors that one needs to consider before coming to a decision on how much money is enough to never work again in India? Can I afford to quit my job? While you are in the process of contemplating the probable response to this question, let’s look at what are these factors which will help you to decide your retirement corpus.

There are 6 primary factors which will help you determine how much do money will you really need to retire.

1. Your current age
2. Your spouse’s age
3. When do you want to retire? (Age of retirement – 40, 45, 50, 55, 60)
4. Retirement expenses per month ( Based on your current spend – 20K, 30K, 50K, 1 lakh)
5. Life expectancy (60 years, 70 years, 80 years or 100 years)
6. Emergency corpus

Let’s bifurcate each of these factors and address them further.

The baseline assumption that we are making before we move any further with our calculations is that you have already taken care of all other investments for expenses such as child education, child marriage, house purchase, car purchase and so on. Additionally, the basics insurance policies such as term insurance, health insurance and personal accidental insurance have been purchased.

Also Read: How much term insurance do I need?

Let’s go ahead with the assumption that both the husband and wife are of the same age for purposes of calculations.

How much money is enough to never work again in India?

Now, let’s calculate how much money is enough to never work again in India for people falling within different age brackets, different lifestyle expenses and different life expectancy.

Scenario – 1

Retirement at Age 40

Current Age – 25 years

Retirement Age – 40 years

Retirement expenses in today`s cost- 30,000

Life Expectancy – 80 Years

Inflation – 6%

Return over inflation (after retirement) -1%

Value of 30,000 after 15 years (at the time of your retirement) – 72,000

Minimum corpus required would be 2.85 Crores at the age of 40 to maintain the monthly expenses of 30,000 (inflation adjusted).

If we increase the expenses to 40,000, the corpus required would be 3.8 Crores.

So, if you intend to increase your expenses by 10,000 per month, you will need an additional corpus of 1 Crore.

Scenario – 2

Retirement at Age 45

Current Age – 30 years

Retirement Age – 45 years

Retirement expenses in today’s cost- 35,000

Life Expectancy – 85 years

Inflation – 6%

Return over inflation (after retirement) -1%

Value of 35,000 after 15 Years (at the time of your retirement) – 84,000

Minimum corpus required would be 3.30 Crores at the age of 40 to maintain the monthly expenses of 35,000 (inflation adjusted).

If we increase the expenses to 40,000, the corpus required would be 3.8 Crores.

So, if you intend to increase your expenses by 5,000 per month, you will need an additional corpus of 50 Lakhs.

Scenario – 3

Retirement at Age 50

Current Age – 30 years

Retirement Age – 50 years

Retirement expenses in today`s cost – 30,000

Life Expectancy – 85 years

Inflation – 6%

Return over inflation (after retirement) -1%

Value of 30,000 after 20 years (at the time of your retirement) – 96,000

Minimum corpus required would be 3.4 Crores at the age of 50 to maintain the monthly expenses of 30,000 (inflation adjusted).

If we increase the expenses to 50,000, the corpus required would be 5.7 Crores.

So, if you intend to increase your expenses by 20,000 per month, you will need an additional corpus of 2.3 Crores.

Scenario – 4

Retirement at Age 60 – How much money do you need to never work again?

So, let`s see how much money do you need to never work again at the age of 60

Current Age – 30 years

Retirement Age – 60 years

Retirement expenses in today`s cost – 30,000

Life Expectancy – 90 years

Inflation – 6%

Return over inflation (after retirement) -1%

Value of 30,000 after 30 years (at the time of your retirement) – 1,72,000

Minimum corpus required would be 5.4 Crores at the age of 60 to maintain the monthly expenses of 30,000 (inflation adjusted)

If we increase the expenses to 1,00,000, the corpus required would be 18 Crores.

So, if you intend to increase your expenses by 50,000 only, you will need an additional corpus of 12.6 Crores.

Additional Factors

There are 3 other factors which should be considered to main the retirement corpus

1. Any emergency – You should have an additional savings of 20–30 lakhs
2. If your spouse is younger 2-3 years younger to you, you would require additional corpus if you both ahve the life expectancy of 80/85/90/100 years.
3. Life expectancy – What if you outlived your calculated life expectancy? What if you lived beyond 80 years or 100 years? You will surely need an additional corpus of 20–30 lakhs that should be invested in equity mutual funds for this.

Conclusion

Now you know, how much money is enough to never work again in India.  Trust me, it is not difficult to achieve the corpus mentioned above. You will need to start investing and make a disciplined approach of investments.

Would you believe me, if I told you that a monthly investment of Rs. 15,000 can give you corpus of 2.6 crores in a span of 25 years at 12% CAGR?   If you have some specific requirements according to your age, expenses etc. you can calculate your retirement corpus here.

Till then Happy Investing!