Does having Rs. 5 crores make you feel rich?
Jan 2021

Dear Patrons,

Does having Rs. 5 crores make you feel rich?

A young enthusiastic young woman thought to have an early retirement. She thought a corpus of Rs. 5 crores would be sufficient for a good retired life. For her, not much is expected by way of inheritance. She has a residential house in which they live in.

She understood that only she has to manage her own earning and investments.

Her salary of Rs.50,000 either goes to monthly living, luxurious life style and EMIs. She has not saved a single paisa till now. She is 24 currently. Let us assume 7% inflation and what her expense will be later in life. (At 7% assumed inflation, Expense to double every 10 years)

Age Expense
24 Rs. 50,000
34 Rs. 1,00,000
44 Rs. 2,00,000
54 Rs. 4,00,000

At age of 54, her spending would be appx. Rs.4 Lac.

…But story does not end here.

Life expectancy in urban area has gone up. what will be the spending  scenario with same inflation?  (Yes, she is not compromising with her lifestyle)

Age Expense
64 Rs.8,00,000
74 Rs.16,00,000
84 Rs.32,00,000

 Rs.32 Lac per month…. Yes. She will need Rs.32 lacs per month in later years of her life.

That is how compounding of inflation shatters all plans.

So to dream to have Rs.5 Crores as a retirement corpus is sufficient?  Let us examine, how much she actually need at age of 54 to feel rich?

Staggering Rs.12 crores. That is what she should have. Much beyond her plan to have 5 crores.

 Infants, toddlers, kids, teenagers, youth are phase of life. Consider Retirement is phase of life. Take steps calculatedly to take care of uncertain future.