Sometimes, when we snatch breaks from our busy schedules, we often find ourselves engaging in things we did as a child or thinking wistfully of the carefree abandon of our childhood. Frequently we wonder whether we will ever be able to live that beautiful part of lives again.
While we are busy making our future, we tend to forget that we can relive our childhood in our retirement. As we work hard and save for short-term pleasures, we tend to ignore the ultimate goal of life – a joyful, independent and secure retirement.
And that is why, we strongly urge you to ponder over the question we asked at the beginning – what is the future of your money? Because it is the future of your money or the way you plan your investment, which will shape your life in retirement.
To get a complete picture of how much money you may need for your retirement, take a look at the following example:
Rahul, aged 25, lives a comfortable lifestyle and let’s say, he needs at least Rs. 40,000 to sustain himself every month. While he has a financial plan chalked out to meet some of the short-term expenses of his life he hasn’t thought of the long term. At this stage, he believes he need not plan for his retirement. Yet, on the advice of his parents, he decides to consult a financial planner. He tells the financial planner that he would like to retire at the age of 60 years.
After a few calculations*, his financial planner tells him that at the time of retirement, he would need at least Rs 3 lakh per month to sustain his current lifestyle. And for this, he would need to accumulate a corpus of at least Rs. 6.6 crore by the time he retired.
Rahul was shocked to hear this and wondered how he could accumulate so much money while meeting all the ongoing expenses of his life. His financial planner asked him not to worry as he was still young. If he started long-term investments in the right investment vehicles on a regular basis, he could be able to save money for retirement. Rahul wisely accepted the financial planner’s advice and began with his investments for the ultimate goal of his life – a comfortable retirement.
Just like Rahul, you too should spare a serious thought for your future. Invest wisely, as the future of your money will determine your future.
The following assumptions have been made for the calculation - Annual cost inflation rate 6%; this is the average rate of inflation and if the money does not grow at a better rate than inflation if loses purchasing power; life expectancy 85 years; this is the time period for which the fund needs to last post retirement; post-retirement investment return rate 9% rate of return from the investments made; value of corpus at the end of life expectancy Rs 0.
The writer is Senior Fund Manager – Equities, BNP Paribas Mutual Fund.
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
 "Financial Planing")
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
)
){kind=small}
){kind=small}
)
)
)
)
)
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}