New Poll: How much money do you need per month to retire in India?

by Manshu on September 16, 2010

in Retirement Planning

When I wrote my post about how much money do you need to retire, I focused on the number that you will need at the time of retirement, and how to get to that number by starting off on your investment today.

I see that a lot of people reach that page looking for information on how much they need today, not necessarily thinking about the future.

At some level it makes sense because that is really the starting point in your calculation. You see where you stand today, how much you need today, and then make certain calls about how your retirement lifestyle will be, and extrapolate your needs for then.

Personally, I think that this question is best answered by each individual himself, but that doesn’t mean there aren’t general guidelines and pointers that help frame the answer.

With these thoughts, I start off on my new poll: How much money do you need per month to retire in India today?

a) Less than Rs.20,000

b) 20,000 – 50,000

c) 50,000 – 1,00,000

d) More than 1,00,000

All of you have different assumptions, life-styles, needs etc. and that might give a lot of variation to the answers, but we won’t know if we don’t poll!

Please leave your comments about your thoughts on this question, and vote using the poll options on the left sidebar just above the “Recent Posts”.Readers getting this in email will have to click through the link and reach the website first.

Hoping to see some great comments like last time.

{ 19 comments… read them below or add one }

prasad September 16, 2010 at 9:04 pm

hi

i believe the options are too wide. anyway, imho, 20k to 50k is sufficient.

prasad

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Manshu September 17, 2010 at 6:05 am

I came up with this after a few iterations; do you think they are too wide at the top end or the bottom end? What options would you have chosen?

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Raja September 17, 2010 at 1:30 am

One of the problem i find with these calculation of future spending is they don’t consider it feasible that a person can really cut down on some of his current spendings in future(after retirement).

Take this example. Currently 25% of my monthly expenditure (excluding EMI’s) goes into fuel(mainly office commute). Now it’s really hard to believe that i’ll spend that kind of amount if am to retire and sit at home.
Another example: currently 10% of my annual expenditure goes in my travel from home town – work town. I don’t see that expenditure happening once i retire and decide to settle in my home town.

Any thoughts on the same?

Regards
Raja
Regards
Raja

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Manshu September 17, 2010 at 6:09 am

If you like you can exclude your expenses on EMI and fuel from the calculation, which sounds reasonable, but what about the increased spending during retirement. The common example is medicine, but the other thing that I see is gifts to grandchildren πŸ™‚ That’s not something you read about a lot, but when I see seniors around me, I see that a large part of their spending is just gifting.

About the travel, I spend a lot on similar type of travel as well, but in my case if I had not been traveling home, I’d use that money to travel elsewhere and take other cool vacations of sorts. Again, I see a lot of people taking out more time to visit relatives and pilgrimages, so I think you are better off keeping that expense as part of your equation.

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Raja September 17, 2010 at 8:35 am

Yup you have a point on medicine and travel too. But the recreational travel happens more or less even now too. Won’t it be a good idea to identify other such things ?
Specifically the percentage of various categories of expenditure that one incurs now and how that might change in a retired life.

Regards
Raja

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Manshu September 17, 2010 at 9:03 am

I got to talking to a friend the other day who is making boatloads of money, and I asked if he is saving a lot these days, and he basically said that the increased saving is zilch because with an increased salary comes a better lifestyle, and you automatically switch higher. I agree with that and I think if you are used to say living on 50k, you won’t settle for less even if some expenses are eliminated because of the way the mind works.

That said, to your point I got these broad categories from MSN which make a lot of sense to me (Medicare is not relevant for an Indian audience though) :

Health insurance
Clothing
Commuting
Child care
Weekday lunches
Business gifts
Social Security and Medicare
Retirement savings
Dues
Business extras
Lifestyle

The article there states to break down your expenses into these categories, and then put a number for retirement as well, which is a good way to go. The post has an inbuilt calculator so folks here can check out that link as well.

http://moneycentral.msn.com/personal-finance/calculators/determine_your_retirement_expenses_calculator/home.aspx

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Nataraj September 17, 2010 at 2:39 am

Life style and expenses list would totally different from current list….Things that I am doing now would be entirely from activities if I retire now….so I tried to create list what all I would do if I retire today…the costs are almost same…there is little or no difference in fuel cost, instead of travel to office, I think I would do more leisure travel at that time. Also I came up with other activities reading, which currently gets subsidized by the company newspaper and Library. Today all my phone calls are foot by the company, and if I am on my own, that would be a cost, which is substantial…My food/ coffee/ tea costs would go up, if I retire today….

So the costs would not much change I suppose…a drop of around 10 to 15%…..and I put the cost at around Rs. 35 K PM.

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Manshu September 17, 2010 at 6:14 am

Nataraj, You did a really good exercise of preparing a list, and it ties back to Raja’s point of thinking about expenses that won’t be there any longer. In your case it shows that there isn’t much difference, and I have a hunch it would show the same result for a lot of people.

I don’t see EMIs mentioned anywhere in your list; is that something that you don’t have to face at all, and then things such as car breakdown, gifts on people’s weddings – one time medium expenses I guess. Do you think about them or plan them out?

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Nataraj September 17, 2010 at 6:27 am

You have asked a good question…House I stay today is unencumbered and does not carry EMI burden….hence I ignored the same…….I have EMI for two houses, which I have given for rent and I do have some sites which have good value today, by far exceeding the loan value …my other logic was, when I retire, by that time, for sure the EMI would be zero……

I thought this exercise was to calculate the expenses of retirement days at today’s cost…..hence EMI not included.

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Manshu September 17, 2010 at 6:43 am

That makes perfect sense then; I guessed that you’re probably not paying EMI, but wanted to check because a lot of others do pay EMI so your answer might lead to some pointers for them.

How is the property market these days? Do you see any signs of over heating or anything like that?

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Sean Browne September 17, 2010 at 11:13 am

I’m always thinking about how much money I should have when I retire. What my life will look like later down the line. But for right now i’m trying to enjoy what I have to the fullest without putting a dent in my pocket. Especially now these days, almost everything costs an arm and one leg. I am contributing to my savings every month for any emergency or even for retirement fund. But realistically I don’t think any amount of savings will ever be enough, it just depends on how you manage all your expenses or investments.

Please feel free to check out my blog and leave comments for me at http://www.wealthvest.com/blog/

Thanks everyone and I hope to hear from you soon!

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Manshu September 17, 2010 at 11:46 am

Why do you say any amount won’t be enough? There has to be some level that is enough right?

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Rajesh September 18, 2010 at 9:40 am

Dear Manshu,

Excellent poll. I have been living outside India since 1992 (14 years in Bahrain & rest in Dubai) and I have no idea how much is required to have a decent retired life with wife & one child. I guess between 20-50K PM should be okay. Looking forward to read your post & results.

Regards,

Rajesh

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Manshu September 18, 2010 at 1:08 pm

Thanks Rajesh. One of the things that’ll strike you when you return is the inflation. That is very real, it’s not just government numbers, you can feel the price rise in almost everything except for cell phones I guess. A look at the results so far shows that 20 – 50k , but there have been quite a few that said more than 50k too.

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sandy June 12, 2011 at 4:15 am

20k to 50k

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Joseph Mathew July 11, 2011 at 12:30 pm

20000 to 50000 is enough

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Rohit January 31, 2012 at 10:32 am

I guess 50,000 to 1 Lakh would be opt… keeping time value of money in mind…
i.e, if some one is earning 30,000 to 40,000 they would definitely need more money in future.
And it will also depends on our lifestyle and habits too.

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V G Bhat January 31, 2012 at 8:21 pm

More than a 1 lakh per month is required as on date with increment per year on far with inflation.

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harkol July 20, 2012 at 6:36 pm

Depends entirely on your age and state. Assuming you own house & car :

Folks with Kids in school will need to budget about Rs.10K/kid/month.
Ration for 4 person family – Rs. 12K
Utilities (Telephones, Internet, electricity,water etc.) : 5K
Cars/Transport: 3K
Misc expenses: 5K
Monthly Distribution of Yearly expenses: 10K

So, About Rs. 45,000/- for a average middle class living. If you are upper middle class then add another 25,000/month for discretionary spends like travel, entertainment etc.

If you are frugal and want to live a low-middle class life you can manage with far lesser. Perhaps 25K.

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