Hi All,
How do you calculate the corpus required for retirement? Caluclating the retirement corpus is not same as other milestone goals. For all other milestones like, buying house, child marriage etc, I need to invest till that time. And I will be using the money in one shot. But in retirement, I will be using this money gradually.
I am planning to retire after 25 years. Suppose, I need rs. 50,000 per month (now) for expenses.
Considering an inflation of 7%, after 25 years it would be equivalent to rs. 137951.59 per month. For an year, I would need 137951.59 * 12 = 1655419.08.
I need rs. 1655419.08, after tax for my yearly expense. My income pre tax should be 2364884.4 (assuming 30% tax bracket).
To get this amount as returns (8%), I need a corpus of rs. 29561055. For my retirement, I need a corpus of around 3 crore. Is this how we calculate the corpus for the retirement?
Suppose I live for another 20 years after retirement. How do we account for the inflation during that time? If I dont account for the inflation, then after 20 years, I will still have savings of 3 crore.
Since my goal is long term (25 years), I could go for equity. What is a safe return that I can assume from equity? Can I assume 12% returns?
If I assume 12% returns from my investments, I need to invest 15967.24 per month for my retirement corpus to be 3 crore. How much more should I invest for adjusting the inflation in the retirement years?
Thanks,
Paul