It seems like a dream for most of us – not having to work, no rush, no deadlines, take the slow life, prioritise the things we want to do and not the things we have to.
And we look to retirement for all these utopian dreams we have.
Thankfully, this dream is possible quite easily before we turn 60 if we only choose to give ourselves early retirement goals.
This dream is possible if you are 30, 45 or even 55.
For today’s newsletter, am ignoring the intricacies of the process and instead giving you target numbers that will help you decide how to reach the retirement corpus goal in 10 years. The intricacies of the process is a bit difficult to put in a newsletter as it involves quite a bit of calculations. We will try to create a short module later that you can use to understand how to achieve this goal.
The answer to the question, ‘How Much Money Do You Need to Retire in 10 Years’ starts with your current expenses.
But before i give the numbers, let me factor in three things:
- First, the inflation. In the last 20 years, the average inflation rate has been around 6.6%. It stands at 7.4% for the last 30 years. So, whatever you need now will have to grow by say 7% for 10 years for you to meet the same standard of living.
- Second, the returns you are likely to get. We are assuming you get an average of 9% return on your investment after tax deductions.
- Third, your tax rate. To make sure you reach your goals, let’s assume your tax rate at 30%.
Let’s now see how much you will need to retire in 10 years:
If your monthly expenses are Rs. 50,000, you will need a corpus of approx. Rs. 1 crore 88 lakh.
If your monthly expenses are Rs. 75,000, you will need a corpus of approx. Rs. 2 crore 82 lakh.
If your monthly expenses are Rs. 1 lakh, you will need a corpus of approx. Rs. 3 crore 75 lakh.
If your monthly expenses are Rs. 1.5 lakh, you will need a corpus of approx. Rs. 5 crore 63 lakh.
If your monthly expenses are Rs. 2 lakh, you will need a corpus of approx. Rs. 7 crore 50 lakh.
Here is the takeaway:
Though the corpus numbers increase at a proportionate rate, the difficulty in getting to the higher retirement corpus numbers beyond Rs. 1 lakh in current expenses increases at a disproportionate rate. So it is easy to get to Rs. 1.88 crore, a bit difficult to get to Rs. 2.82 crore, more so but still possible to get to Rs. 3.75 crore. But to reach Rs. 5.63 crore or Rs. 7.50 crore in 10 years needs more than a simple investment and growth plan.
The best way is to reduce your expenses from now. The second way is to learn how money works and invest in the right assets.
But most important of all is to understand how you can make it work. To do this, you need to realise what you are capable of. Unfortunately, it is difficult unless someone shows you how. We have done that for you through our Evolution U programme. You can sign up for the lifetime membership here for only Rs. 600.