Is 30x of annual expenses enough for retirement in India?

Today we will discuss an interesting topic – How many times of your annual expenses do you need as your retirement corpus to retire comfortably?

For example, if someone has an annual expenses of Rs 6 lacs per year, then can they retire with Rs. 1.8 crores (30 times)? This is the focus of the article today!

Retirement Corpus required to retire in India comfortably

The current state of “Retirement” Advertisements

From last 4-5 yrs, I can see a lot of conversations, articles and YouTube videos which talk about retirement and its importance.

There are many retirement plans and pension plans also launched these days which talk about importance of retiring with enough money and a secured way of generating pension once you stop working.

There is no doubt that retirement is top most financial goal (and the longest one) for any investor. We all will probably have a much longer retirement life than we imagine today. Our parents also have retired just few years back (or going to retire soon).

A 60 yrs old person can expect to live anywhere up to 85 – 105 yrs in future. With changing life style, less dependence of kids, increasing expenses at retirement – planning for retirement has become much more important than any time in history.

The problem is that we don’t know when we will die. You CANT plan for just 20 yrs of retirement, because what if you die at 100 yrs? It’s quite a tough thing to predict when you will die, and almost impossible to plan for it.

Hence the best you can do is take the worst case, and plan for a very long retirement.

Retirement Planning is very tough

First thing you should know is, that there are many variables when it comes to retirement. There are things like

  • Inflation
  • Returns
  • Taxation
  • When will you die
  • When will you retire

When you do any retirement calculations, you make some assumptions and you get an answer.

One big problem is that in reality there can be a lot of changes in these numbers, and your planning can go for a toss. Hence you need to look at things realistically and plan in such a way that takes care of worst scenarios.

Next 40 yrs cash flow

So let me start with asking how your expenses will look into future? If someone wants to retire today, how will their next 30-40 yrs of cashflow may look like.

Assuming that you want to retire at some point of time and your annual expenses at retirement is 1 unit. Then how this will change over time?

How your yearly expenses will increase over the years because of inflation

Can you see how drastic the expenses can vary in your retirement life due to various inflation rates? Note that in reality, the expenses might come down a bit once you are old enough like 80-90 yrs, but I have still not considered it because there can be other types of expenses like medical costs which will shoot up.

Is 30x corpus enough for retirement?

Now let’s dive deeper into the main question and focus on this article – “Is a corpus of 30 times yearly expenses enough to lead a long retired life?”

The short answer is YES, but before I go deeper into the answer – let me show you a case study

Imagine a person retires with following numbers

  • Per month expenses in the start of retirement = Rs 12 lacs (1 lac per month)
  • Corpus = 3.6 Cr (30x)
  • Inflation Assumed = 7%
  • Post Tax Returns = 9%

How long will the retirement corpus last in this case?

The answer is 43 yrs as per excel calculations. For simplicity purpose, for now we have taken a case where inflation, returns are all fixed and the person only needs the monthly expenses as per increasing inflation and no other withdrawals are done till end. In which case, the corpus change will be very smooth.

Here is how it looks like

How retirement corpus lasts for 43 yrs with some assumptions

What if your assumptions are wrong by 10% margin?

Most of the calculators just give you an answer like above graph, but does not ask a question – “What if things go wrong?”

  • What is the inflation is more than what you assumed?
  • What if you needed more income in future than you planned?
  • What if you were not able to generate the returns you assumed?
  • What if you had less corpus than you originally planned?

How different will be the result now if you are wrong by 10% margin on all 4 variables?

So, lets see that case too.

  • Corpus is 10% less = 3.24 cr (instead of 3.6 cr)
  • Monthly Expenses are 10% more = 1.1 lacs per month (instead of 1 lacs)
  • Inflation is 10% higher than assumed = 7.7% (instead of 7%)
  • Returns are 10% lower than assumed = 8.1% (instead of 9%)

So instead of 43 yrs, how fast the corpus will finish now?

The answer now changes to 27 yrs

Yes, from 43 yrs .. it now changes to 27 yrs, which is 16 yrs earlier.

How retirement corpus lasts 27 yrs

However in real life, either all 4 things can go wrong by some margin, or just 1 or 2 or 3 things may go wrong.. so there are various scenarios here..

  • Nothing goes wrong
  • One variable goes wrong
  • Two variable goes wrong
  • Three variables goes wrong
  • All four variables go wrong

This in total makes 16 different combination.. We have seen the best case (when nothing goes wrong) and worst case (when all 4 variables go wrong) ..

But when we see all 16 variables together .. it looks like below

Note that these calculations above are assuming an inflation of 7% and post-tax returns of 9%. If you take lower returns or higher inflation, then the results will be different ..

Testing the data for 250 iterations

I assumed that Inflation and Returns will come down slowly over long term as we move towards a more developed economy. We might reach to a 2-4% inflation (starting with 7% today) and 4-6% returns post tax (starting with 9% today). I added a variation in calculations and plotted 250 variations of the same chart and here is the results.

Monte Carlo Analysis of Retirement Planning in India

As you can see from above graph, the results can vary a lot depending on inflation and returns combination. On an average the corpus lasts for 41 yrs.

I also took 5000 iterations to see how long the money finishes and here is the plot.

retirement corpus Monte Carlo analysis of how long the corpus will last

What we observed was that 98% of the times the money lasted in range of 35 yrs to 47 yrs, which is a decent enough planning, but the assumption is that all our assumptions about inflation and returns hold true.

Investing in Fixed Deposits for Income Generation

A lot of investors are extremely conservative and don’t want to invest in anything other than bank fixed deposits. We know that bank fixed deposits are highly secure, but at the same time – they are extremely inefficient in taxation and also provide below inflation returns.

But let’s test that case as well.

Let’s assume that a person is putting all their money in fixed deposits only. In which case the returns can be taken as 4% post tax (30% tax deducted from 5.5% returns)

Below I have shown how long the retirement money will last when a person has 60x, 50x, 40x, 30x, 20x and 10x corpus. I have done 250 scenarios and plotted them to see how the corpus ends.

how long will retirement corpus last

As you can see, when the returns are lower – you need much more than 30x corpus if you want to last it for a very long term.

With just 30x, it will last for just 22 -24 yrs. The frustration of seeing your money finishing while you are still don’t see your death coming your way might be very horrible experience.

So conclude, Yes 30x corpus is good enough to retire, but the assumption is that you will not be dipping into that corpus to withdraw any big amounts like for buying house, or for your kids’ education or any large medical emergencies.

Better to have those things separate than your 30x corpus.

What if my corpus is less than 30x?

It’s going to be an issue if you are retiring with less corpus like 20x or 10x or 15x. In which case, you will have to make sure that you also have some decent equity exposure to bump up your returns so that your corpus can last longer. We at Jagoinvestor are working on various strategies which can be used to make sure that the corpus last longer using an equity exposure and generating a regular stream of income for our clients.

Do let me know what your thoughts about this article are.

Also, if you are interested in the topic of retirement planning and want to listen to a casual but very detailed talk on this topic, do listen to my talk with P V Subramanyam where we have discussed various aspects about retirement

Disclaimer : Note that these calculations are highly complex at times and there are lots of things which contribute to the calculation. I don’t claim to have done things perfectly from statistical point of view. This article is only a basic calculation with some high level assumptions. Do talk to your financial advisor before creating your retirement strategy.

Senior Citizen Saving Scheme (SCSS) – How it works and brief review

The investment product which I will be talking about in this article will meet all your requirement as a senior citizen.

It is called as “Senior Citizen Saving Scheme”. It is one of the safest investment products because it is sponsored by the Government of India.

Senior Citizen Saving Scheme

What is SCSS?

Senior Citizen Savings Scheme (SCSS) is a government-sponsored savings instrument for individuals above the age of 60. It is one of the safest saving instrument for senior citizens, because it is a government-owned product and there is no risk of the capital loss. The purpose of this scheme is to provide a steady and secure source of income to senior citizens for their post-retirement phase.

The basic requirement a senior citizen will want from his/her investment is two basic things – safety and regular income. The Senior Citizen Savings Scheme (SCSS) meets these two requirements, and you get the tax benefit under section 80C on the amount invested.

Individuals can apply for this scheme from Post Offices, Public and Private Banks. The current rate of interest this scheme is offering is 7.4% (it changes from time to time). Both the spouses can open a single account and joint accounts with each other. Multiple withdrawals from an account will not be permitted.

Features of SCSS –

a) Interest Rates are revised Quarterly –

The interest rate under this scheme is revised every quarter (3 months) which goes to 4 times in a year. The interest rates are determined depending on the economic conditions such as inflation etc.

Past 2 yrs interest rate of this scheme (201 and 2019) –

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2018 – 2019 (Q1) 8.3%
2018 – 2019 (Q2) 8.3%
2018 – 2019 (Q3) 8.7%
2018 – 2019 (Q4) 8.7%
2019 – 2020 (Q1) 8.7%
2019 – 2020 (Q2) 8.6%
2019 – 2020 (Q3) 8.6%
2019 – 2020 (Q4) 8.6%
2020 – 2021 (Q1) 7.4%


b) Minimum and Maximum Deposit Allowed under this Scheme –

The minimum contribution a senior citizen can make in this scheme is Rs. 1,000 and a maximum deposit of Rs. 15 Lakh can be made.

For example, if Mr Sharma receives Rs 13 Lakh as a retirement benefit, then he can invest up to that amount in the scheme. This clause applies irrespective of whether the account is held individually or jointly. However, one can only open a joint account with his/her spouse.

But, if an individual holds multiple accounts under this scheme, then the total amount deposited in all such accounts shall not exceed the maximum limit of Rs 15 Lacs.

c) Tenure of this Scheme –

The maturity period for the SCSS scheme is 5 years. However, it can be extended for another 3 years, effectively bringing up the total period to 8 years. In order to extend the tenure by 3 yrs, the individual will have to submit Form B after duly filling it. An extension in the tenure will be allowed only once. Once the extension is approved, the interest rates will be the applicable quarterly basis.

For instance, Ms Sita has deposited Rs. 7 Lakh under SCSS in April 2014, when the interest rate offered was 9.3%. However, when she extended this scheme in April 2020, the interest rate she was eligible to earn stood at 8.4%.

d) Premature Withdrawal and Closure –

An individual can withdraw prematurely from their account under this Scheme only after one year of opening the account. However, for any reason, if an individual closes their account before the completion of 2 years, 1.5% of the deposited amount will be deducted as penalty.

Premature closure of the account is allowed with some penalty. If the account is closed after the first year and before the end of the second year, an amount equal to 1.5 per cent of the deposit shall be deducted as penalty. If the account is closed on or after the second year, an amount equal to 1 per cent of the deposit shall be deducted.

For instance, if Mr Shah deposits Rs. 5 Lakh in Senior Citizen Savings Scheme on 1st March 2018 and closes it on 6th February 2020, he will have to bear a penalty of Rs. 7500. But, if the investor is deceased before the maturity of their account, no penalty will be charged.

e) Mode of Investment –

The mode of investment under this scheme will be either cash or cheque. If the investment amount is below Rs 1 Lac then the amount can be invested through cash. But if the investment amount exceeds Rs 1 lacs then the investment can be done only through cheque.

f) Capital is Secure –

As you all know that this scheme is purely governed by the Government of India that is why the capital invested is fully secured under any circumstances.

g) Interest Payout –

As we know that Interest is calculated on a quarterly basis, the interest will be credited to the account every quarter, on 1 April, 1 July, 1 October, and 1 January. If the interest payable every quarter is not claimed by an account holder, such interest shall not earn additional interest.

h) Nomination Facility –

On the time of opening the account, the senior citizens can also attach nominee to this account so that if something happens to the senior citizen then his/her money will go to the nominee.

Taxation of SCSS –

Investments made under SCSS are eligible for tax deduction under section 80C of the Income Tax Act, 1961. According to the current rules, if your interest earnings from SCSS are more than Rs 50,000 in one fiscal year, you are liable to pay TDS (Tax Deducted at Source) for the interest earned.

Eligibility Criteria of SCSS –

a) An individual who is a citizen of India can open this account in an individual capacity or jointly with a spouse.

b) Non-residential Indians (NRIs) or a Person of Indian Origin (PIOs) cannot invest in this scheme. Also, Hindu Undivided Family (HUFs) do not qualify for this scheme.

c) As this is a senior citizen savings scheme, so any resident of India aged 60 years or above is eligible to open an account under this scheme. However, there are few exceptions to the age bar:

  • Retirees in the age group of 55-60 years who have opted for Voluntary Retirement Scheme (VRS) or Superannuation are eligible to avail the scheme if they apply for the same within one month of gaining their retirement perks.
  • Retired defence personnel can avail this scheme irrespective of their age, provided they fulfil all other conditions.

d) Nomination under this scheme can be done only in favour of resident Indians.

Documents required for opening the SCSS Account –

a) Proof of ID and address (any one of the following) –

  • Aadhaar card
  • Passport
  • Driving licence issued by Regional Transport Authority
  • Voter ID card
  • Job card issued by MNREGA signed by State Government officer

Note – The above document has to be self-attested.

b) Additional documentation if the investor is less than 60 years –

  • Certificate from the employer indicating the details of retirement on superannuation or otherwise, retirement benefits, employment held and period of such employment with the employer
  • Proof of date of disbursal of retirement benefits (the date of opening of an account under this Scheme should be within one month of the date of receipt of the retirement benefits)

c) In addition to the above documents, PAN card is mandatory.

How to Open an Account under the Senior Citizen Savings Scheme?

An SCSS account can be opened with a post office or any of the private or public banks in India. The procedure for both is similar, and is mentioned below  –

Step #1 – Visit your nearest bank branch or Post office branch

Step #2 – Submit the Duly filled up Form A

Step #3 – Submit the original and photocopies of all the necessary documents mentioned above, broadly address and identity proof.

Step #4 – Submit the age proof with all the above documents.

List of few public sector banks which offers to open SCSS Account to their senior citizen customers –

You can click on the below banks to see the form of SCSS.

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  • State Bank of India
  • Bank of Baroda
  • ICICI Bank
  • Bank of Maharashtra
  • Bank of India
  • Canara Bank
  • Syndicate Bank
  • Punjab National Bank
  • Allahabad Bank
  • United Bank of India



Conclusion –

So this was all that I wanted to share about Senior Citizen Saving Scheme. If I have missed out on any point then you can highlight in the comment section.

How much “Gold” can you hold without any income proof?

Most of the Indians are obsessed with gold. But are you aware of the restriction on how much gold can you hold even the worth of gold does not match your income status?

In this article I will exactly touch base on that.

How much gold can indians hold without any income proof?

How much gold can you have without receipts?

Have you ever wondered what will happen if govt starts raiding all households in India and demands the proof of how you bought all that gold you have?

Often we do not keep a track of receipts and proof of how we paid for that gold bought very long ago. In that case, how much gold can you hold without any proof, even if it does not match your income status?

As per Central Board of Direct Taxes (CBDT), this limit is different for a married woman, unmarried women and a man. This might sound strange, but here is the limit

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A Married woman 500 gms
Unmarried woman 250 gms
A Man 100 gms


What type of proofs is required in case of any enquiry?

These above limits include both the inherited and the self-bought gold jewelry. In case of inherited gold also, you need to have the receipts in the name of original owner.

In case you are holding very high amount of gold, just make sure that you have all the valid tax receipts and invoices saved at your end.

The WILL can also act as proof of inheritance, in case the gold you inherited is mentioned in the WILL. Alternatively, one can also submit a family settlement deed, will, or a gift deed stating the transfer of such commodity to you.

On contrary, if there is no such document available, then the officer will analyze your family’s social status, customs, and traditions to come to a conclusion on whether your statement is valid or not and whether to confiscate the amount of gold you are holding or not.

Do let us know what you think about this limit in the comments section.

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