I am 68 still working. How much corpus a person (I) required to live a decent comfortable retired life. I will retire at 70 years of age
Ans: Determining the corpus needed for retirement depends on various factors such as your desired lifestyle, expected lifespan, inflation, healthcare costs, and other expenses. Here's a general approach to estimate the corpus required for a comfortable retirement:
Calculate Annual Expenses: Begin by estimating your annual expenses post-retirement. This includes essentials such as housing, food, utilities, healthcare, transportation, and leisure activities. Don't forget to account for inflation, which typically ranges from 4% to 6% annually.
Determine Retirement Duration: Estimate your life expectancy or the number of years you expect to live post-retirement. This will help you calculate the total amount needed to sustain your lifestyle throughout your retirement years.
Account for Inflation: Inflation erodes the purchasing power of money over time. Factor in inflation when estimating future expenses to ensure your retirement corpus retains its value and can cover increasing costs over the years.
Consider Healthcare Costs: Healthcare expenses tend to rise with age. Account for medical costs, including insurance premiums, routine check-ups, medications, and potential long-term care expenses, which can be significant in later years.
Include Contingency Fund: Set aside an emergency fund to cover unexpected expenses or financial setbacks during retirement. Aim to have at least 6 to 12 months' worth of living expenses readily available in a liquid account.
Evaluate Additional Income Sources: Consider any additional sources of income during retirement, such as pension benefits, rental income, annuities, or part-time work. These can supplement your retirement corpus and reduce the burden on your savings.
Consult with a Financial Advisor: It's advisable to consult with a financial advisor or retirement planner who can assess your specific financial situation, goals, and risk tolerance. They can help you create a personalized retirement plan and determine the optimal corpus needed to achieve your retirement objectives.
Regularly Review and Adjust: Once you've established a retirement plan and accumulated your desired corpus, periodically review and adjust it as needed based on changes in your lifestyle, financial goals, market conditions, and other relevant factors.
While there's no one-size-fits-all answer to how much corpus you need for retirement, aiming for a retirement corpus that can cover your anticipated expenses comfortably, along with a contingency fund and additional income sources, can help ensure a financially secure and fulfilling retirement.
