POSTED BY February 10, 2014 6:09 pm COMMENTS (7)

ONCan someone tell me how much money a person would need on a monthly basis after his retirement for him/her and spouse?

Points to be considered are :

1. Person monthly spending as on Today is Rs x, Excluding Child Education Cost and their upbringing cost since this cost will not be required after retirement.

2. Inflation has to be considered while coming up the future cost.

3. No rental expanses assuming person owns a home to stay.

So what I need is if Today’s expenses are Rs x and Future expenses (After 25 Years ) has to be y*x what will be number y.

Dear Invest, please do not use old Hero Honda approach. Fill it – Shut it – Forget it. Retirement planning should not be like this. The world is changing with each passing day and any fixed rule specially the so called thumb rules may left you high and dry at the very needed time. Do not try to average things out for next 50-70 years. Why? You may take your life expectancy till age 75 or 80 but who ‘ll pay your bills if you live till age 95 or even 100. Due to continuous increase in medical science and your own WILL to stay fit can make it a reality. Please think over it.

Thanks

Ashal

Dear Invest, the answer is NO. The return must be higher than the inflation. We never know when Inflation ‘ll go ahead of return and till what time (since 2008 till date retail inflation is higher than basic saving returns from FDs and PPF).

Thanks

Ashal

Thanks Ashalanshu for the affirmative answer. I agree that recent figures of inflation surely more than safe rate of return.

But there has to be some sort of amount to overcome this difference right? i.e. ok if 50% spending and 50% savings may not work but perhaps 1/3 monthly expense and 2/3 savings/investment? i.e. if X is monthly expenditure and 2 X monthly savings/investment would work?

Click on the link below to find your answer –

http://www.personalfn.com/tools-and-resources/financial-calculators/retirement-calculator.aspx?utm_source=website&utm_medium=retirementcalc&utm_campaign=rightband#.UvnvRqTrbIU

A Follow up question could be –

Suppose one needs X amount as monthly expenses. And if one save also X amount per month. Will that saving be enough to last in post retirement life? i.e. if one saves 50% of the earnings and manages in the remaining 50% will that money generate enough post retirement? two basic assumptions inflation and returns on that 50% savings /investments is somewhat same.

Is there any generic formula that says as long as you save certain % of your earnings for whatever 35 years of your working life. remaining post retirement expense can be ok?

Dear akgc2, please check the calculator link shared by dear Viren and post your update here.

The specific link to retirement calculators in the above site is here.

freefincal. com/retirement-calculators-3/

Thanks

Ashal

I guess, http://www.freefincal.wordpress.com would have your answer…

Thanks,

Viren Phansalkar