[shankar.balan]

I am given to understand from my Financial Adviser, that if one wants to live a life of great comfort and do anything one wants to fearlessly which includes plenty of holidays and travel and all the trimmings, then it seems that one needs to have a clean 12 Cr Rupees of Corpus.

Apparently this sum, if invested wisely should ensure a yield of a clean Rs 1 Cr. Income p.a.

The only tax on this would be the LTT, because Income Tax has already been paid on the original corpus.

Apparently this phantasmagorical, splendiferous and wonderfully magical sum, will allow one to handle the vagaries of inflation and the possibility of lowered interest rates too in the future as well as medical needs and so on, given the assumption of a normal city-dwelling, treadmill imprisoned wage-slave/lab-rat’s Life Expectancy to be around 78-80...

Now, how does one reach this mythical sum?

Personally, I have absolutely no clue.

The thing to remember is (in my considered opinion) that one should at all times strive to be content and happy. Follow the heart more than anything else.

This way, you may not die rich, but are more likely to die happy. Which, quite frankly, if I am able to achieve, will be quite sufficient for me.

It is important to be happy. It is certainly useful as well as enjoyable to have money. But one should not become such a slave to money and to the activity of amassing it, to the exclusion of all else.

You see, when it is finally time to “shuffle off one’s mortal coil”, irrespective of however much money and wealth one may have, one cannot take it along with one...

[ece2k2]

Originally Posted by shankar.balan

I am given to understand from my Financial Adviser, that if one wants to live a life of great comfort and do anything one wants to fearlessly which includes plenty of holidays and travel and all the trimmings, then it seems that one needs to have a clean 12 Cr Rupees of Corpus.

Apparently this sum, if invested wisely should ensure a yield of a clean Rs 1 Cr. Income p.a.

I think with a 12 crore corpus, one should limit his/her monthly expenses to 1.25 to 1.5 lakhs to be on the safer side. This is hoping that the average inflation remains at about 6-7% over the next few decades. But if someone manages to build that sort of corpus and also have a secondary source of income (say rental income) that takes care of his/her regular expenses, that would be awesome. This would ensure that the corpus can enjoy the full power of compounding for the years to come.

[knrn]

An interesting read. I have a cousin in the US. He lives in NY and is into financial services. He is 33 and plans to retire by 40. Of fast this is becoming a trend in the corporate sector. High atrrition rates, job insecurity and stress I think are the primary factors but I feel that it has overwhelmed the human capacity so much that people have started to think of early retirement.

I find this trend a little sad and amusing at the same time. Why amusing, because I am 38 and I have just started my career after finishing my studies which took me 20 years. As they say every man is an island and to each his own.

[Equus]

12 Crore is almost 2 Million Dollars!! We dont need 1Cr per year.

About 40-45 Lakhs on average for the next 20 yrs should be adequate based on my calculations. Aim for 5Cr corpus and if we can beat it, aim higher.
But dont starve today to get happy later, strict no no!!

[sunilch]

Originally Posted by shankar.balan

I am given to understand from my Financial Adviser, that if one wants to live a life of great comfort and do anything one wants to fearlessly which includes plenty of holidays and travel and all the trimmings, then it seems that one needs to have a clean 12 Cr Rupees of Corpus.

This is utter crap (sorry for the rant) according to me

Unless you are planning to have a very lavish lifestyle once you retire - the one that includes multiple foreign holidays, spending days and days on a cruise line, driving around town in German marques, you won't need that much.

This kind of reminds me of scenes from the movie 'Dil Dhadakne Do'. No amount of money will be enough if one want to live and die rich.

Originally Posted by shankar.balan

Apparently this sum, if invested wisely should ensure a yield of a clean Rs 1 Cr. Income p.a.

This implies a Simple return of 8.33% which is very very much possible and easy to generate in today's time. I am speaking of pre-tax return though. Smartly investing 12Cr will give you way more than 1Cr per annum. But you never know what will be the tax rate and interest rate scenario in the future.

Originally Posted by shankar.balan

Apparently this phantasmagorical, ....... Life Expectancy to be around 78-80...

A small note here - If your plan is to retire before or around 40 and hope is to live until 80, then yes - you might need 12Cr to cover everything. That will include your future always rising medical expenses, always rising insurance premiums, always rising fees for education of your kids (assuming you have 1-2) and so on and so forth. If you plan to retire a bit latter, then you know what I am saying

Originally Posted by shankar.balan

The thing to remember is (in my considered opinion) that one should at all times strive to be content and happy. Follow the heart more than anything else. This way, you may not die rich, but are more likely to die happy. Which, quite frankly, if I am able to achieve, will be quite sufficient for me.

This is the real 'Satya Vachan' of life. If you are happy with what you have and always look at the bright side, nothing else will matter. My parents used to earn under 5K per month from their jobs not very long back (I am not quite old yet) and we lived paycheck to paycheck. Yet I never saw them worried about money and they paid for my education in private colleges (fortunately I studied in a good government school and junior college). After graduation, I worked for a few years and then self financed my education in US (that included a student loan in US which I will pay off this year). My parents are not overtly social but they have their network, used to attend some spiritual sessions once in a while and used to devote some time to social work until age related health issues cropped up for them recently. I have always seem them happy and content with life despite some ups and downs that came our way.

So yes, it is not necessary to have a huge bank balance when you retire. Money is addictive. Too much of it is always harmful and not necessary.

Originally Posted by shankar.balan

It is important to be happy. It is certainly useful as well as enjoyable to have money. But one should not become such a slave to money and to the activity of amassing it, to the exclusion of all else.

This reminds me of one of my friends from college. He is always under stress due to his high paying job. I advised him to take a less stressful job at another firm even if entails a small pay-cut. But he is not able to decide on the same you know why? --- He wants multiple foreign trips each year, pay for his kid's fees at an international school, pay for the maintenance of his apartment in a 'luxurious complex', and so on. This always make me wonder about the rest of the populace. Are kids studying at state board or regular schools not smart enough? Can't they have lucrative careers if they work hard? Do we really need to live in luxurious houses to enjoy life? Well we know the answer. I only need to look at my past to realize the truth.

[Latheesh]

I remember reading this post by civic-sense in May 2018 and had a candid discussion about it with few people I know (all in 40's and IT sector)

https://www.team-bhp.com/forum/shift...ml#post4401323 (The plight of IT professionals in their 40s)

Most of them have experience of (or faced) 2000 and 2008 crisis and are very cautious about their personal finance. Some of them can retire if they want.

[AltoLXI]

Originally Posted by sunilch

Money is addictive. Too much of it is always harmful and not necessary.

Add to that : Money is also evil.

There have been many books / articles written which mention the fact that the very concept of banking / financial institutions itself is a big ponzi scheme. By designing the system to have inbuilt mechanism of providing interest on deposits / inflation, it fuels greed making ordinary folks always running behind the elusive riches in the uncertain world. The only way out of this is live a spartan life and it takes a lot of will power and cooperation from other family members not to fall into the consumerism trap.

[shankar.balan]

@sunilch
I like your “bull at a red flag” rant. I am in my later 40’s.
I would like to live peacefully, with dignity and without fear in my later years. And YES, I do like the “good things” of life.
I’m not sure how long I will last on this planet, but assume around 25 -27 years...
Yes, I absolutely do like some of the more expensive things in life and I would certainly want to pursue my passions and hobbies without stinting. Hence, for someone like me, I think it would be more prudent to err on the higher side in my estimates rather than otherwise.

@ece2k2 - While this is sensible advice about limiting expenses, it does not always work out that way. There is in my experience usually something or other that pops up and chucks a spanner in the budgeting! Rental income yes. Sensible. But when weighed against managing property, it is a real pain. The power of compounding, yes absolutely. Hence I think it ll be good to have a larger corpus and live well but in a non-extravagant manner.

@knrn - Retirement and Early retirement only means (in my book) that you stop working for someone else and jump straight off the endless treadmill, so as to be able to focus on what you love most. I certainly would love to jump off the treadmill and spend much more time on things that I love - my pets, my family, my books, music, photography, travel etc. But to indulge these things properly, one requires a solid corpus so as to live fearlessly. No harm in having some extra either.

@Equus - Absolutely correct. Live well now while you are earning. But save enough for when you are no longer earning, so as to continue to live in the style to which you are accustomed.
Given the world unpredictability, no one can be sure of what kind of interest rates are going to be there in future. No one can be sure also, of what levels of inflation we may encounter. Hence, I thought my adviser was being prudent in advising a higher corpus. Now it is entirely another matter to be able to actually manage to amass such a corpus! I do sincerely hope I’m able to get where I need to get, in the time available!

@Latheesh - I’m not an “IT Guy”. However I do serve Industry with Intelligent Solutions. I cannot retire right now, much as I may wish to, being in my later 40’s. But I most certainly do not believe in “killing myself” for the work at hand and for an employer per se. I am lucky in being able to work out of “passion” but there is a day that I want to see, when I shut shop completely, and only focus there onwards, on my own consuming personal interests in life.

@AltoLxi - I do not pretend to be any holier than I am. Like most people on this Planet, I also have a need of, and have a certain liking towards “Money”.

So I’m not sure - whats the corpus size one needs. The only take-away I’m getting from this thread is that it is all completely “relative” and this is an extremely “subjective” thing. One Size in this case, as with many other things in life, cannot and will not fit all!

[srsrini]

Originally Posted by shankar.balan

I am given to understand from my Financial Adviser, that if one wants to live a life of great comfort and do anything one wants to fearlessly which includes plenty of holidays and travel and all the trimmings, then it seems that one needs to have a clean 12 Cr Rupees of Corpus.

Apparently this sum, if invested wisely should ensure a yield of a clean Rs 1 Cr. Income p.a.

There are many many things wrong about what has been said by the financial advisor.

As others have mentioned, the approach to the retirement corpus is very different.

1. Get an estimate of the expenses in the first year of retirement.

a. This should include what you need to as well as what you want to do
b. Factor in health insurance and other retirement special costs
c. If you have expenses that occur say once in a few years, annualize them.

2. Let us say this figure is X.

3. Estimate the yearly inflation for this - let us call this I
4. Estimate the years that you would live off the corpus - Y
5. Estimate (this is a big heuristic) the possible returns on the corpus - R

Now the corpus calculation is simple. C has to be big enough to support your expenses of X per year growing at I per year for Y years. The corpus itself would grow at R per year.

It may surprise you that even if R is > I, the corpus could still diminish!

C should be your target.

Please never look at what returns C could possibly give in the first year - that is not relevant to the calculations.

[shankar.balan]

Originally Posted by srsrini

There are many many things wrong about what has been said by the financial advisor.

As others have mentioned, the approach to the retirement corpus is very different.


C should be your target.


Please never look at what returns C could possibly give in the first year - that is not relevant to the calculations.

I would appreciate if you can PM me your number. I’d like to talk to you.
Thanks!

[deep_bang]

My 2 cents: Fully agree to all what Srini said above.

Here is the way I am doing it. Finding the corpus amount is one. Next there are others such as children's eduction fund etc that also need to be taken into account. So what we would have a list of targets and a timeframe for each. Retirement may be just one such goal. The reason I say this is, the time when most of us accumulate the capital is over decades (may be between 20 and 60 yrs - but more likely between 35 to 50 as that's when we realize the danger of not doing so). During this time, we fund not just the retirement goal but all others too.

Next once you know the amount and timeframe, need to actually invest. Again depending on the goal and current agez different people would be inclined towards different ways of investment. At 30, one would be inclined to be heavily invested in equity. At 40, a little less so as the risk is higher. At 50 I believe that one should start completely switching to debt and safe instruments.

Now, there could be certain goals such as a vacation goal that's more aggressive than the others. For example, I could be heavily invested in aggressive (high risk high return) instruments for these if I am agreeable to a possible risk of capital erosion (or low returns due to bad markets). My point being, not all targets need the same risk. I would tend to be more cautious of managing the retirement target than say a goal to buy a bungalow/farm/vacation house/the BMW you always wanted etc.

[V.Narayan]

View from the other side of the fence

A few thoughts from some one on the other side of the fence. When you are 30 something the financial planners over emphasize this piece on the corpus you need to have. Yes corpus is one of the 4 things you need to have but it is not predominant. Allow me to elaborate:

(A) First, second and third start looking after your health & diet while you are in your 30s. All our plans post 60 or 65 go for nought if health is not on your side. The time to invest is our 30s and 40s.

(B) Own your own house and be done with the EMIs before you retire. Don't fall for this millennial trap of not needing a house.

(C) Even if you have company provided health insurance purchase your own most comprehensive health insurance in addition to that. At 35 or 45 you can still get it at a reasonable cost. At 60 it will be out of reach and almost unavailable for a dozen most likely ailments. Even though I had company insurance (my own business) I took out a plan for all the family members when still in my early 40s and paid those premiums for almost two decades. Touchwood no claims have been booked all these years , with God's Grace, and today with no business any more it is our only cover for the unforeseen.

(D) After you've addressed these three points figure out your corpus. Your corpus should be in two parts. Part One which is beyond reach of any tampering by you and which gives a periodic income. Do not underestimate your temptation to tamper and attempt to be over clever with investments. A rental income, or a pension plan or a monthly income scheme are all in this bucket. The second part should be your corpus in shares, mutuals, gold etc that hopefully increase in value over time and can from time to time be skimmed off to pay for those one time costs of kids wedding, education etc.

And finally do not assume you will stop working and earning one fine day at age 60 or whatever. Most, who so desire, find second careers that still pay something and that augments the income for some more years.

[pseudo_coder]

Anyone doing Amway or similar network marketing for early retirement? I was recently approached by a person on LinkedIn. He said he has a business that connects buyers with manufacturers. I asked if the business has a website. He said no. He then asked me to read a book about network marketing. Then on the next call, he told that the company is Amway. I told that I am not interested.

These businesses are not illegal, and better than ponzy pyramid schemes like e-biz. But the way they are promoted and kind of brainwashing they indulge in, I classify them as grey businesses.

Originally Posted by V.Narayan

Even if you have company provided health insurance purchase your own most comprehensive health insurance in addition to that. At 35 or 45 you can still get it at a reasonable cost. At 60 it will be out of reach and almost unavailable for a dozen most likely ailments.

Could you please elaborate this? Does taking a health insurance at 35 help at 60? Else, why not start taking insurance once you cease to be in a job?

[V.Narayan]

Originally Posted by pseudo_coder

Could you please elaborate this? Does taking a health insurance at 35 help at 60? Else, why not start taking insurance once you cease to be in a job?

The kind of health coverage a person gets and the premium he pays is a direct function of his health at time of first taking out the policy and age. Better health and lesser age = lower premium. The health insurance is an annual renewal or a two-yearly renewal in most cases. But if your health tracks well and there are non claims or small claims the premium stays reasonable. At 60 if you have diabetes or a weak heart or are seriously overweight or are a smoker you will have a near impossible task buying any insurance cover for love or money.

[SideView]

Originally Posted by V.Narayan

The kind of health coverage a person gets and the premium he pays is a direct function of his health at time of first taking out the policy and age. Better health and lesser age = lower premium.

Interesting discussion.What is preventing the insurer from suddenly increasing the premiums to unreasonable amount once we reach 60? Or once we start claiming too much?