Fast Forward to your Retirement

You have understood your Networth and your cashflow statement by now [if not, read earlier blogs]

• What's your Networth
• What's your cashflow statement

Now that you are done,

Let's make few assumptions as on today 

• You are at the Age of 35
• You wish to retire when you are 50
• Your monthly expenses today is around 75,000
• You assume to have an annual inflation of around 6%
• You assume to build a retirement corpus of around say 7 Crore (Big Number, or is it?

Let's fast forward now to the date of your retirement. 

• You are 50 now
• Your monthly expenses are 1,79,741 (Future value of 50000 considering inflation)
• You have 7 Crores 
• Now you expect to earn 5% post tax return on 7 Crore (beleive me it's an optimistic number as after retirement you would only be putting most of your money in FDs)

Given the facts above, now let's assume you start withdrawing your expenses (growing at 6% each year coz of inflation) from this retirement corpus (grows at 5% each year), your whole 7 Crores would be exhauseted by 2066 when you are 83. 

Now, ofcourse there are lots of variables and factors that I have used to arrive at this number. However, this is just to illustrate some facts and give you an idea there is a way to put numbers for your retirement corpus. 

I would suggest you to sit down and start making your own assumptions about the variables mentioned above and get your retirement corpus you are comfortable with.  

The calculations for the above assumptions are as follows 

Cashflow statament, Income equals savings plus emi plus expenses

Well, keep in mind that retirement goal is typically one of your goals, but is the most important goal that you should save for, why? coz no one else will do that for you. 

And again, remember the golden rule, while making assumptions in finance "Always make conservative estimates of figures that benefits you, and generous estimates of figures that are basically against you". This will avoid you from boundary conditions :)