Hi, I'm 38 yrs old. Currently my salary is 1.1 lakhs & expenses is 1 lakh including unnecessary loan emi's which will end in another 4 yrs. No investments. Expected to work for another 15 yrs. How much to save more for peacefully retirement. 2 - Kids education & marriage. No own home. Monthly expenses will be 50000 without loan emis

Ans: Your situation is very good so no need to worry

Ans: Here's a breakdown to help you estimate how much you can save towards retirement at 45, considering your current situation and future plans:

Income:

Monthly Salary (excluding taxes): ?65,000 (approx.)
Yearly Bonus (average): Let's assume a conservative estimate of 1 month's salary (?65,000)
Part-time Income (average monthly): ?45,000 (considering the range)
Total Average Monthly Income:

(?65,000 + ?45,000)/12 + ?65,000/12 ≈ ?91,667

Expenses:

Living Costs: ?25,000
Family Support: ?20,000
Electronics (Yearly): ?30,000/12 = ?2,500 (monthly)
Total Average Monthly Expenses: ?47,500

Savings Potential:

?91,667 (Monthly Income) - ?47,500 (Monthly Expenses) ≈ ?44,167

Important Considerations:

Future Expenses: You plan to buy a car in 2 years, get married, and potentially start a family. These will significantly impact your savings. Factor in estimated costs for these events.
Inflation: Inflation will erode the purchasing power of your savings over time. Consider an inflation rate of 5-6% while calculating your retirement corpus.
Here's a suggestive approach:

Emergency Fund: Aim for 3-6 months of living expenses as an emergency fund. With your current expenses, this could be ?1.42 lakh to ?2.84 lakh.
Retirement Savings: Focus on maximizing retirement savings after building your emergency fund. You have a 15-year horizon (45 - 25 = 20 years, minus 5 years for planning major expenses). Investment advisors generally recommend saving 15-20% of your income for retirement. With your potential savings of around ?44,167, consider allocating a significant portion (around ?6,600 to ?8,800 monthly) towards retirement funds. You can adjust this based on your risk tolerance and future financial goals.
Investment Strategy: Since you have a long investment horizon, you can consider an equity-heavy approach for your retirement savings (70-80% equity). However, as you approach retirement, gradually shift towards a more balanced allocation with debt instruments to reduce volatility.
Retirement Corpus Estimation (using a simplified formula):

Corpus = (Retirement Age - Current Age) * Annual Expenses * Inflation Adjusted Factor

Assumptions:

Retirement Age: 45
Current Age: 25
Annual Expenses (adjusted for inflation at 5% for 20 years): Let's assume your expenses grow at the same rate as inflation, leading to an annual expense of ?3.78 lakh at retirement (?25,000 * 1.05 ^ 20)
Inflation Adjusted Factor (assuming a withdrawal rate of 4% and investment return slightly exceeding inflation): 25
Estimated Corpus: ?3.78 lakh/year * 25 ≈ ?9.45 crore

Note: This is a simplified estimation and doesn't account for future income growth, investment returns,

Recommendations:

Create a Budget: Track your income and expenses to identify areas for saving.
Automate Savings: Set up SIP (Systematic Investment Plan) for mutual funds to automate your retirement savings.
Seek Professional Advice: Consider consulting a Certified Financial Planner (CFP) for personalized financial planning based on your specific goals and risk tolerance. A CFP can help you create a comprehensive retirement plan considering your future expenses, investment strategy, and overall financial situation.
CFPs are financial advisors who have rigorous training and experience in financial planning. They are held to a high ethical standard and are required to act in their clients' best interests. Consulting a CFP can ensure you receive sound financial advice tailored to your unique needs and aspirations.

By being proactive with your savings and investments, you can work towards achieving your retirement goals at 45. Remember, this is a journey, and you might need to adjust your plan as your life progresses.

Ans: Hello;
You may invest 25K per month into NPS. It's an E-E-E type investment product.(Exempt)

Select active choice and allocate 75% to Equity, 15% to corporate bonds and 10% to Govt securities.

Select UTI as pension fund manager for Equity and HDFC for bonds & G-Secs. (Recommended based on past performance).

Assuming modest growth of 9% you may expect a corpus of 4.61 Cr at 60 years of age.(As per current rules 40% of the corpus should be utilised to buy annuity and 60% you can withdraw lumpsum and invest elsewhere)

This can generate fixed income more then enough to cover your expenses indexed to inflation.

PPF is another instrument for retirement planning but their is an investment limit(1.5 L per year) and returns are also lesser.

Mutual funds are another avenue which can yield superior returns for example if you invest 25 K per month in pure equity scheme for 30 years you may expect a corpus of 11 Cr but typically people utilise their mutual fund gains over 7-8 years for some other purpose. NPS has limited withdrawal allowed because it is meant for your retirement pension.

Happy Investing!!

Ans: Hello;

Your current savings may suffice to meet higher education needs of your kid.

The current monthly expenses of 40 K will be 80 K in 12 years time considering 6% inflation.

You need a sip of 80 K per month so as to achieve a sum of around ~ 2.4 Crs in 12 years.

If you do an SWP at 4% from this sum, then you may expect monthly income of around 80 K.

Happy Investing;