45-Year-Old Seeking Advice: How Much More to Save for Comfortable Retirement in India?

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: Start SIP after completing your EMI, I don't know what is the meaning of peaceful retirement for you and what is your goal for marriage and education of your children

Ans: Your question requires a detailed financial assessment based on your assets, expenses, and retirement timeline. Let’s break it down step by step.

Current Financial Position
Age: 44 years

Retirement Goal: 55 years (11 years left to save)

Monthly Expenses: Rs 40,000

Existing Assets:

Home: Rs 60 lakh (Not considered for investment)
PPF: Rs 24 lakh
Gold: Rs 12 lakh
Property: Rs 14 lakh
SIP: Rs 40,000 per month
Equity: Rs 5 lakh
NPS: Rs 2.4 lakh
Total Investable Assets: Around Rs 57.4 lakh (Excluding home)

Retirement Corpus Needed at 55
Monthly expenses of Rs 40,000 today will increase due to inflation.

At a 6% inflation rate, your monthly expense at 55 years will be around Rs 75,000.

You need a corpus that can generate Rs 75,000 monthly for at least 30 years.

This requires Rs 3.5 crore to Rs 4 crore (approximate estimate).

How Much More to Save?
Current Investments: Around Rs 57.4 lakh (excluding home).

Future Value of Current Investments at 55 (Assuming moderate returns): Around Rs 2 crore.

Shortfall: You need at least Rs 1.5 crore to Rs 2 crore more in the next 11 years.

You must increase savings and optimise investment returns.

Investment Strategy to Reach the Goal
1. Increase Your SIP Investments
Your Rs 40,000 monthly SIP is good but needs to increase gradually.

Increase SIP by 10% every year to reach the target corpus.

Use actively managed funds for higher growth potential.

2. Maximise NPS Contributions
Your NPS corpus is low (Rs 2.4 lakh).

Increase NPS contributions to get tax benefits and retirement security.

Allocate more to equity within NPS for better growth.

3. Use PPF Wisely
PPF will mature at 15 years but can be extended in blocks of 5 years.

Let it grow for tax-free returns till you retire.

Avoid withdrawing unless necessary.

4. Optimise Gold & Property Investments
Gold does not generate passive income.

Consider gradually shifting gold holdings into mutual funds or NPS.

If your property is not generating income, consider selling or renting it out.

5. Emergency & Health Planning
Keep at least Rs 10 lakh as an emergency fund in fixed deposits or liquid funds.

Ensure you have adequate health insurance for the family.

Final Insights
Your goal of retiring at 55 is possible with better financial planning.

Increase SIPs, boost NPS contributions, and reallocate gold/property for better returns.

Target a corpus of Rs 4 crore to ensure financial security post-retirement.



Best Regards,

K. Ramalingam, MBA, CFP
Chief Financial Planner
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

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;