Skip to main content

How Financial Planners plan your Retirement expenses?

If you are 30, married and living in some Metro, chances are that you are spending close to 30,000/- every month on your household. You pay every month for services like phone bill, dish TV, maintenance, groceries, milk, maid expenses, and so on. While the rule of thumb says that we should save close to 30% of our monthly income but the truth is that something or the other keeps coming up and we end up saving very little. And on top of it majority of us have loans on us, be it a personal loan for maintaining our life style or a home loan for that dream home of ours.


Chances are that as your family grows and your lifestyle improves, these expenses will also grow along with. As a matter of fact, your growing salary will compensate for your growing monthly expenditure. But, what will happen when you stop working. How will you adjust your increasing monthly expenditure with your never growing or static pension?

Let’s assume your expenses are Rs. 30,000/- per month and will grow at only 7% every year. For a 30-year-old, this is how the numbers will be when he turns 60.



If today, a 30-year-old is spending Rs. 30,000/- per month, he/she will be spending 2.28 lacs per month in the year 2047 when he will be 60 years old. Don’t confuse expenses with inflation which is currently at 2-3%, because our expenses vary on other factors also like our lifestyle, growing kids, aging parents. So, inflation is not the only parameter.

If he lives till 80 years for your age, how much lump sum will he need at his age 60 to maintain the current lifestyle (30,000/- p.m.)? And, let’s assume that his expenses will get reduced to half once he retires. For anyone a clean guess would be: maybe 1 – 2 crores.
But, In Actual the Total Lump sum corpus which he will need to sustain his retirement is 3.7 crores.
And, how much should be saved monthly to achieve this amount. It can be easily achieved by saving Rs. 11,000/- per month for the coming 30 years (assumption: saved in an instrument which has 12% rate of return).



What we just discussed above are assumptions based on one scenario, and cannot be applied to each and every one. Every individual is different and has different spending pattern, life goals, etc. Hence, there is no size that fits all in case of financial planning. Some might be spending more than the assumed scenario of Rs. 30,000/- per month or for some the needs might be less during retirement years like there won’t be any rent or EMI, or kid’s expenses. So, the right approach is to get your financial planning done as per your aspirations and situation.

There is no doubt that you need to plan your finances well in advance to avoid any major setback which might jeopardize your retired life. There are two things where everybody gets stuck – WHOM TO ASK? And another thing is INACTION. We leave it until tomorrow which never comes.

For the first question, you can check with any practicing Certified Financial Planner who knows his maths well to understand your queries and resolves them amicably. For your INACTION, only you can be the driving force for your secured financial future.


Charu Hastir, CFPCM is founder of http://www.theriteplan.com/. Rite plan is an online financial planning portal created to achieve a single objective of providing easy and Do It Yourself Financial Planning to netizens. Rite Plan is wholly owned by Tikkun Olam Financial Planning Services LLP. Please visit: https://theriteplan.com/index.php?route=common/home/

Comments

Popular posts from this blog

Union Budget and Your Financial Plan?

Honorable Financial Minister Piyush Goyal presented this year’s Interim Budget on 1st February 2019. Every Year, on the day of the budget announcement, you can see almost every individual glued on to their Television or mobiles to check the budget updates with much excitement. Sometimes the Budget announcements cheer us and sometimes they make us sad as we think that there are not many benefits being offered for individuals in our tax slab.

Budget is also referred as Annual Financial Statement as it contains an extensive account of the Government’s finances i.e. Government’s revenue and expenditure for the fiscal year. How relevant is this budget when it comes to our personal financial savings? Should we wait for the Budget to be announced and then start our investments or should we do our investments without any relevance to the Budget? Let’s discuss this in detail.
Budget helps in Tax Planning

Budget surely helps in planning the taxes for the next financial year. Budget is presente…

Why your Financial Plan is always Work in Progress?

Ever heard someone saying, this is my last month in the Gym, after that there is no need for me to workout ever again…I will stay fit for the rest of my life without any fitness regime. No one can retain the perfect physique forever without exercise. It is always a constant effort to stay at the desired level for almost anything that you think of. You cannot be a great chef without trying out new recipes, you cannot be a great marketer without adapting to new marketing strategies, you cannot be a great fashion designer without adapting your fashion sense towards the trending styles. Leave all of this, you even cannot even think of becoming a good parent if you don’t change from old tricks to new methods for upbringing this generation kids. If you have to upgrade your act with every other thing in life, then how your investments could be any different.
The Financial Planning Process has 6 broad steps with the last one focussing on the importance of monitoring and revision of the plan …