Saturday, April 6, 2013

How much money is enough to retire ?

I think it depends upon ones lifestyle.

I think having a total of Rs 1crore(10m) is enough if you plan to live a modest lifestyle.

You can have a Fixed deposit of that amount which gives you around 9-10 lacs (900k to 10m) per annum. Now if someone who do not want to live lavishly can save a lot from this much amount. Which again increases your net year by year.

For me spending Rs 300k per annum today is modest style of living.

Small calculation:

Let us say that today I need 3lacs (300k) per annum for my expenses.

My Fixed Deposit gives me 9lacs(900k) per annum.

Inflation for next 10 years be at 10 percent per annum.

In  above case at the end of ten years I will have a net of 1.4 crore(14 m)  giving me 13 lacs (1.3 m) per annum returns and annual expenses will be 7.5lacs (750 k).

Note that this 1.4 crore is a result if I do not invest the profits per annum into FD if I do that it will be a higher number.


Along with it get some appropriate insurance policies( medical,accidental, lifeterm). These are important especially when you are not working.

This answer is totally based on my perspective of modest lifestyle.
I think if I have this much amount in my bank account and if I do not enjoy my job then I will retire but currently neither is true for me.

For having a lavish lifestyle I will suggest not to leave your job because there are no limits to it.

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