How much do I really need to save for retirement so that I can have a secured and tension free future? This question pops up in every individual’s once in their life time. It is difficult for everyone to answer this question as the future is uncertain and unpredictable. Most of the people think that they have just joined the job then why to think of retirement at this time? Let pass next 15 to 20 years then I will think of retirement. I don’t need it now. But do you think your this attitude is justifiable? Well let me tell postponing your retirement planning can be very costly to you. Let’s look at the reasons why it is important to start the retirement planning from today only. Further in the article, I would also be discussing what amount of money you need to save for retirement.
Where Retirement Goal Comes in Your Financial Goals List
We are assuming that you are at the age of 30 years with a spouse and two children. The age of eldest child is 5 years and youngest child is 3 years. Let’s look at your financial goals-
- Buying a car of budget of Rs. 7,00,000 in two years.
- Getting own home within the budget of Rs. 75,00,000.
- Education expenses of eldest child after 12 years would be 12 lakh.
- Second child higher education expense after 15 years will be from now Rs. 12 lakhs.
- Eldest child marriage expense after 20 years from now will be Rs. 20 lakh.
- Youngest child marriage expense after 22 years will be Rs. 20 lakh.
The above list only considers basic financial goals of a family. You can make adjustments in the list according to your own preferences. Once you have satisfied all these financial goals of yours, start planning about your retirement.
How Much You Need To Save To Retire Peacefully?
Suppose you and your spouse are spending 50,000 per month on your expenses. The amount does not include the kids school fee, expenses, etc. This means that you will be spending the same amount at the time of your retirement.
In short and simple words, when you will retire you will be needing the equivalent amount of Rs. 50,000. So in order to meet the expenses for next, say, 25 years, you have to accumulate near about Rs. 69 lakhs by the age of 60.
So, it is very important that, if you are now at the age of 30 years, after reaching the age to 60 years, you should have accumulated Rs. 69 lakh till that date so that you can enjoy your retirement peacefully.