Start Planning for retirement:
For
most of us retirement planning means PF and Gratuity paid from our salary.
Frankly the word retirement brings to our mind only these two items. Its good
that these two components of our salary gets added onto our retirement corpous
month after month. The major question is : Would it be enough?
Lets say that our current expense per month is 15000. Any idea how much it would be in 25 years. To sustain our lifestyle as it is today how much we would have to spend 25 years from today.
At
5% interest:
Years
|
Year-Start
|
Year-End
|
1
|
15000
|
15750
|
2
|
15750
|
16537.5
|
3
|
16537.50
|
17364.38
|
4
|
17364.38
|
18232.59
|
5
|
18232.59
|
19144.22
|
6
|
19144.22
|
20101.43
|
7
|
20101.43
|
21106.51
|
8
|
21106.51
|
22161.83
|
9
|
22161.83
|
23269.92
|
10
|
23269.92
|
24433.42
|
11
|
24433.42
|
25655.09
|
12
|
25655.09
|
26937.84
|
13
|
26937.84
|
28284.74
|
14
|
28284.74
|
29698.97
|
15
|
29698.97
|
31183.92
|
16
|
31183.92
|
32743.12
|
17
|
32743.12
|
34380.27
|
18
|
34380.27
|
36099.29
|
19
|
36099.29
|
37904.25
|
20
|
37904.25
|
39799.47
|
21
|
39799.47
|
41789.44
|
22
|
41789.44
|
43878.91
|
23
|
43878.91
|
46072.86
|
24
|
46072.86
|
48376.50
|
25
|
48376.50
|
50795.32
|
As you can see from the table listed above, at the end of 25 years to sustain today’s life style costing 15000 Rs per month, you would need 50795 Rs per month. I am taking here inflation of 5%.
Challenges:
i)
Need to ensure that our investment and savings targeting
our retirement years yields an income reflecting inflation.
ii) Medical Cost: This is a huge burden on old age. As we grow old medical expenses are only going to grow. So apart from taking care of income to provide decent life style, we also have to plan for medical emergencies.
The savings and investments planned to retirement years has to be kept separate from financial needs to buy house, children education, family vacation etc. To execute this plan for more than 2 decade calls for strict discipline.
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