How Much Does a 35-Yr Old Need to Retire at Various Expense Levels?

Retirement planning is crucial, especially when inflation is a silent yet powerful force eating away at your purchasing power. In this article, let’s examine the situation using Rakesh’s example across three income-level scenarios. We have used Angel One’s retirement calculator for the analysis. 

Scenario 1: Rakesh’s Annual Expense Amounts to ₹6 Lakh

1. Age: 35 years
2. Retirement age: 60 years
3. Estimated inflation: 7%
4. Current value of existing investment: Nil
5. Monthly expenses today: ₹50,000 (₹6 Lakh p.a.)
6. Life Expectancy: 80 years
7. Expected Return on Investment (Before Retirement): 14% p.a.
8. Expected Return on Investment (After Retirement): 8% p.a.

The annual income required after retiring would be ₹32,56,460. This means the monthly expenses would increase to ₹2,71,372 (divide the annual figure by 12).

The retirement corpus required to maintain the same standard of living for 20 years post-retirement would be ₹5,91,53,512.

To accumulate this corpus, Rakesh would be required to save ₹21,943 per month from now until retirement to build the required corpus

Scenario 2: Annual Expenses is ₹9 Lakh

1. Age: 35 years
2. Annual Income: ₹25 Lakhs Per Annum (LPA)
3. Retirement age: 60 years
4. Estimated inflation: 7%
5. Current value of existing investment: Nil
6. Monthly expenses today: ₹75,000 (₹9 Lakh p.a.)
7. Life Expectancy: 80 years
8. Expected Return on Investment (Before Retirement): 14% p.a.
9. Expected Return on Investment (After Retirement): 8% p.a.

The current monthly expenses of ₹75,000 at an inflation rate of 7% over 25 years (from age 35 to 60) at the time of retirement will be ₹4,07,057. This translates to an annual expense of ₹48,84,689. 

Monthly Savings Required to Retire Comfortably: ₹32,914.

Scenario 3: Annual Expense is ₹12 Lakh

1. Age:35 years
2. Annual Income: ₹40 Lakhs Per Annum (LPA)
3. Retirement age: 60 years
4. Estimated inflation: 7%
5. Current value of existing investment: Nil
6. Monthly expenses today: ₹1,00,000 (₹12 Lakh p.a)
7. Life Expectancy: 80 years
8. Expected Return on Investment (Before Retirement): 14% p.a.
9. Expected Return on Investment (After Retirement): 8% p.a.

The current monthly expenses of ₹1,00,000 at an inflation rate of 7% over 25 years (from age 35 to 60) at the time of retirement will be ₹5,42,743. This translates to an annual expense of ₹65,12,919. 

Monthly Savings Required to Retire Comfortably: ₹43,885. The corpus needed to sustain expenses for 20 years post-retirement at ₹11,83,07,024. 

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.