Frankly, you can’t apply the one-size-fits-all approach to determine the amount of money that is required to lead a peaceful retired life. People have varying spending habits and their financial responsibilities at the time of their retirements are also very different. However, there is a way to determine the amount of money that an average Indian individual needs to enjoy his/her golden years with financial ease.
Number of Years of Retirement
At some point of time in history, 60 was decided to be the retirement age in India. Also, at that time, the life expectancy for both males and females was much lower than what it is today. Today, with technological and medical advances, the average life expectancy of an urban Indian male is close to 77 and that of an urban female is 79. This is just the average – many touch their mid-80s. However, the current retirement age in India is 58 years (60 years in the case of government employees) and has not increased with the increasing life expectancy. And nor is it expected to rise.
So, the average life expectancy has improved but the retirement age is still the same. This means that the number of years that one spends post his/her retirement until s/he expires is more than what it was earlier. Naturally, the number of years for which you need to plan your retirement today is more than what it used to be earlier. If people lived for 7 – 10 years post their retirement a couple of decades back, today they live for 22 – 25 years after they have hung up their boots.
This tells us that we need to plan for close to 25 years of retired life. What could be the best investment tool to do this planning? Gold? Real Estate? SIP?? While these are some of the more popular investment options, you cannot completely depend on them as their value can fall and rise anytime. However, if you’re planning to have a financially-peaceful retirement, you could consider taking professional insurance assistance.
To start with, let's first understand that today you are both earning and spending, while after retirement, your income will cease but the expenses won’t. Post-retirement, your expenses range from health and home maintenance to travel and hospital bills.
Now, let’s say you’re a 35-year old individual whose annual income is 12 lakhs. Assuming your income will increase as you age, and you and your family will maintain the same lifestyle, the average amount of the expenses that you’re likely to incur up until your retirement age (assuming 60), is Rs 4 crores for a period of 25 years (60 minus 35).
Do you find this figure too high? If you do, it is a good indication that you have never seriously calculated your long-term expenditures. For example, a single month’s housing loan EMI for a 2BHK home in the city is close to Rs 30,000. Let’s calculate the total expenditure if the term is 20 years.
30,000 X 12 months = Rs 3,60,000
3,60,000 X 20 years = Rs 72,00,000
This is Rs 72 lakhs leaving your pocket. Now Rs 4 crores will not seem such a large figure.
Now, after retirement, to live comfortably, research has shown that the average Indian will spend at least half the total money s/he spent while earning. In this example, that figure is Rs 2 crores.
And now the question arises: how do I save enough to ensure that I get Rs 2 crores after retirement?
This is where insurance experts such as OneInsure come in. Powered by Robinhood Insurance Broker, OneInsure is engaged in providing valuable insurance-related services including helping people plan their retirement for over a decade now.
To take an informed decision when it comes to retirement plans. To get the best retirement solutions, contact OneInsure via email at email@example.com or via a call at 86559-86559.