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How much money $$$ to retire now ??

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How much money $$$ to retire now ??

Last updated: February 4 2013
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  • How much money $$$ to retire now ??

    Lately, I have seen many people talk about retiring early. Largely due to health, job insecurity and sometimes due to too much money :-)

    I certainly want to retire early and once my boss asked me : how much money do you think you need to retire now ?
    Rules are :-

    1) the money you quote can be invested
    2) you may start some business but no salary income
    3) you already own a house (since the price of the house can inflate the retirement money in a huge way)

    So guys, how much do you think is enough for you to retire now ?
    My own calculation is in the USD 2-3 Mn range (age 37) and I have heard fantastic replies on this.....

    Happy New year...
  • #2

    #2

    Re : How much money $$$ to retire now ??

    Well if you are talking about USD 2-3 million that is about 15 crores approx and that is very good money but question is do you have that sort of money ?? If not then you will have to work quite a few years to make that money .. 1 crore is not small money so 15 crore is pretty big imho ...

    Comment

    • #3

      #3

      Re : How much money $$$ to retire now ??

      Originally posted by pablopicasso View Post
      Lately, I have seen many people talk about retiring early. Largely due to health, job insecurity and sometimes due to too much money :-)

      I certainly want to retire early and once my boss asked me : how much money do you think you need to retire now ?
      Rules are :-

      1) the money you quote can be invested
      2) you may start some business but no salary income
      3) you already own a house (since the price of the house can inflate the retirement money in a huge way)

      So guys, how much do you think is enough for you to retire now ?
      My own calculation is in the USD 2-3 Mn range (age 37) and I have heard fantastic replies on this.....

      Happy New year...
      10 cr Rs.
      I'll straightaway invest it in FD and earn 60L (post tax) as interest income. 5L pm will be great money to satisfy all my needs and desires.

      Comment

      • #4

        #4

        Re : How much money $$$ to retire now ??

        Originally posted by pablopicasso View Post
        So guys, how much do you think is enough for you to retire now ?
        My own calculation is in the USD 2-3 Mn range (age 37) and I have heard fantastic replies on this.....

        Happy New year...
        If you are 37 years old as on today then USD 2-3 mn or Rs 15 cr is not going to be enough in India.

        A 10 kg bag of flour (atta) used to cost Rs 8 in 1984. In May, 2004 when Congress/UPA government came in power, the same bag was priced at Rs 70. Now the same bag (same brand) costs Rs 240. So price of your basic food item has gone up 30 times in some 29 years. This is just one example, situation of rice, pulses and basically every food product is the same. Compare the prices of anything including petrol, electricity, gold, clothing, general maintenance of home, medicines, hospitals etc. etc. and you can safely say that Indian Rupee has lost about 90-95% of its purchasing power in last 29 years. That is as far back as I can remember. In recent years INR is losing its purchasing power at even faster pace.

        Your USD 2-3 mn or Rs 15 Cr of today are gonna be worth a lot less say 25-30 years from now. God willing, if you lived till the age of 100, you can imagine what your situation will be.

        Comment

        • #5

          #5

          Re : How much money $$$ to retire now ??

          Originally posted by ThePunjabi View Post
          If you are 37 years old as on today then USD 2-3 mn or Rs 15 cr is not going to be enough in India.

          A 10 kg bag of flour (atta) used to cost Rs 8 in 1984. In May, 2004 when Congress/UPA government came in power, the same bag was priced at Rs 70. Now the same bag (same brand) costs Rs 240. So price of your basic food item has gone up 30 times in some 29 years. This is just one example, situation of rice, pulses and basically every food product is the same. Compare the prices of anything including petrol, electricity, gold, clothing, general maintenance of home, medicines, hospitals etc. etc. and you can safely say that Indian Rupee has lost about 90-95% of its purchasing power in last 29 years. That is as far back as I can remember. In recent years INR is losing its purchasing power at even faster pace.

          Your USD 2-3 mn or Rs 15 Cr of today are gonna be worth a lot less say 25-30 years from now. God willing, if you lived till the age of 100, you can imagine what your situation will be.
          I know inflation is killer and there are lot of uncertainties if you are retiring at 37 but 15 cr is a lot of money.

          For an average middle class guy making 12L/yr it will take 125 years to earn 15 C. Assuming 10% salary increase every year and working till age of 62 (full retirement age), his total earnings would be 11Cr (not even considering time value of money , having 15C now vs 11C over 25 years)
          For a middle class lifestyle 15C is definitely enough to retire at 37 and cannot really live lavishly if someone is considering to retire at such a young age.
          Last edited February 1 2013, 08:10 AM.

          Comment

          • #6

            #6

            Re : How much money $$$ to retire now ??

            Originally posted by ThePunjabi View Post
            If you are 37 years old as on today then USD 2-3 mn or Rs 15 cr is not going to be enough in India.

            A 10 kg bag of flour (atta) used to cost Rs 8 in 1984. In May, 2004 when Congress/UPA government came in power, the same bag was priced at Rs 70. Now the same bag (same brand) costs Rs 240. So price of your basic food item has gone up 30 times in some 29 years. This is just one example, situation of rice, pulses and basically every food product is the same. Compare the prices of anything including petrol, electricity, gold, clothing, general maintenance of home, medicines, hospitals etc. etc. and you can safely say that Indian Rupee has lost about 90-95% of its purchasing power in last 29 years. That is as far back as I can remember. In recent years INR is losing its purchasing power at even faster pace.

            Your USD 2-3 mn or Rs 15 Cr of today are gonna be worth a lot less say 25-30 years from now. God willing, if you lived till the age of 100, you can imagine what your situation will be.
            Thats a very grim picture you give .. Some points are true and some are not .. Agree that prices of daily goods has increased a lot but we cannot judge alone the prices of 1984 and compare with 2013 .. Means we cant use this calculation as a benchmark and say that prices will increase another 30 times in next 20 years but one never knows ...


            I personally feel 1 cr had value in 1980s and 1 cr even has value today .. Its not like you cut a 1 cr cheque to meet expenses every year ...

            I still feel average Indian salary ( when I say average I discount all the richy riches in this forum and talk about the aam aadmi whose still paying emis for his 1st loan unlike some here who claim to have 5 houses ) is about 40-50k per month .. And in this they run their household and save whatever they can ... So if your theory holds true then they should be wiped out by say even 2025 which is just 12-13 years from now ....

            Comment

            • #7

              #7

              Re : How much money $$$ to retire now ??

              Why are people quoting 15 crore not enough. And someone says middle class earning 12L/year. Man - I think man rich people here on this thread. Many elders in my family are settled in small towns after retirement and after their kids became independent(started earning).
              With an owned house in small town - 15-20K is enough for monthly needs. Whenever they feel - they come and stay with their kids.

              Comment

              • #8

                #8

                Re : How much money $$$ to retire now ??

                Originally posted by gaurang View Post
                talk about the aam aadmi whose still paying emis for his 1st loan unlike some here who claim to have 5 houses ) is about 40-50k per month .. And in this they run their household and save whatever they can ... So if your theory holds true then they should be wiped out by say even 2025 which is just 12-13 years from now ....
                Sir, like I said the price of atta (flour) has gone up from Rs 70 to Rs 240 over the last 8.5 years. How many people of the aam aadmi type in our country can say that their income has gone up more than 3.5 times in last 8.5 years?

                Fact is that Iin our country aam aadmi has ALWAYS taken a hit from inflation. If you didn't notice, the savings rate in the country are decreasing because people are unable to save due to rising prices of basically everything. Typical middle class nuclear families used to have only one earning member in 1980s and now you have 2 earning members in a typical nuclear family trying to keep up pace with inflation.

                Yes, those who have household income of rs 40-50k per month will be wiped out just 12-15 years from now or even earlier if the inflation continued at the current pace. 40-50k may qualify one for middle class today but such people will be counted as poor 12-15 years from now. Rs 5000 per months used to be decent middle class pay in mid 1990s around the time I got my first job. Now Rs 5000 per month guy is considered very poor. Correct me if I'm wrong.
                Last edited February 1 2013, 01:26 PM.

                Comment

                • #9

                  #9

                  Re : How much money $$$ to retire now ??

                  Originally posted by rahul40
                  why not you considering that 15cr is current money. and this 15cr will grow everyday, more faster then his spending. if he spend 1lac per month, and 15cr grow 11lac per month( in whatever form of investment, fd, RE, gold, mf) then the remaining 10 lac will further increase his capital to 15.10cr
                  Fixed income instruments like bank FDs will give you 8-9% pre-tax return and that too fixed only for next 5-10 years. You don't know what FD rates will be 10 years from now and what inflation rate will be 10 years from now.

                  Now to beat inflation, you will want to look at asset mix that includes gold, mutual funds, equities etc. BUT there is no certainty about returns from these investments.

                  IMHO retiring at the age of 37 with just Rs 15 Cr in hand is a very bad idea. You want to retire for what? Sleeping at home all day long or for enjoying the life like to travel etc? Returns on INR 15 Cr will not enable one to enjoy the life.

                  Comment

                  • #10

                    #10

                    Re : How much money $$$ to retire now ??

                    Dear Punjabi

                    In last 40yrs government salaries have increased at much higher proportion than the below flour (aata) example.

                    Examples-
                    1) 40 yrs sampling:
                    My father-in-law started his class I govt job in 1973 at Rs 400/month. After 40 yrs, the same salary for the same position for a new joinee is around Rs 40,000 / month. Salary rise = 100 times

                    Avg quality unbranded Aata from a chakki at that time was around Rs 1/kg, now its around Rs20/kg. Aata price rise = 20 times

                    2) 20 yrs sampling
                    In 1993, the same position for a new starter had a salary of around Rs4000, now its rs40,000/ month. salary increase = 10 times

                    Unbranded Aata in 1993 was Rs5/kg, now its around Rs20/kg. Aata price rise = 4 times

                    Conclusion:
                    Salary rise (specifically givt salries) in last 40yrs has always been higher than the inflation, rather it has been much much higher than inflation. Assuming Aata is directly related to inflation.


                    Question is - will salaries continue to increase so heavily?

                    Coming back to a corpus of Rs 15 crore for retirement - then I would say just one thing - There is an old saying:

                    Khali baith kar khaney sey Kuber ka Khazana bhi khali ho jata hai.







                    Originally posted by ThePunjabi View Post
                    If you are 37 years old as on today then USD 2-3 mn or Rs 15 cr is not going to be enough in India.

                    A 10 kg bag of flour (atta) used to cost Rs 8 in 1984. In May, 2004 when Congress/UPA government came in power, the same bag was priced at Rs 70. Now the same bag (same brand) costs Rs 240. So price of your basic food item has gone up 30 times in some 29 years. This is just one example, situation of rice, pulses and basically every food product is the same. Compare the prices of anything including petrol, electricity, gold, clothing, general maintenance of home, medicines, hospitals etc. etc. and you can safely say that Indian Rupee has lost about 90-95% of its purchasing power in last 29 years. That is as far back as I can remember. In recent years INR is losing its purchasing power at even faster pace.

                    Your USD 2-3 mn or Rs 15 Cr of today are gonna be worth a lot less say 25-30 years from now. God willing, if you lived till the age of 100, you can imagine what your situation will be.

                    Comment

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