Retirement Planning: Current age 30 years; monthly expenses Rs 30,000; retirement age 60 years; what should be retirement corpus
Retirement Corpus Planning: To meet the retirement corpus target, you can work on increasing your monthly income and investments, and to ensure the required return on your investment, you can keep revising your investment planning. So, based on your current lifestyle and monthly expenses, you can assess your retirement corpus.
Retirement Corpus Planning: What do you think about retirement planning? What will be your retirement age? What will be your monthly expense at that stage? How will you achieve that goal? These are the primary questions you should ask while planning your retirement. But you can't imagine your monthly expenses 30 years from now; you can't predict your future income; and you can't guess the return that you will get on your investments. Despite all these factors, investment planning should be done. The future expenses can be gauged by the current lifestyle. To meet the retirement corpus target, you can work on increasing your monthly income and investments, and to ensure the required return on your investment, you can keep revising your investment planning. So, based on your current lifestyle and monthly expenses, you can assess your retirement corpus.
In this write-up, through expert inputs, we will show the retirement corpus and monthly income a 30-year-old person with Rs 30,000 monthly expenses needs if they plan to retire at 60 years of age.
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What is retirement age?
There is no fixed age for it. The retirement age can be as soon as one gets financial freedom. For someone, it can be early 40s; for others, it can be 60 or beyond.
Why retirement planning
It is necessary to achieve or maintain financial freedom post retirement. So that a person doesn't need to depend on anyone for their monthly expenses.
What should be retirement corpus?
Since you can't guess your age, the corpus should not run short lifelong.
Size of a retirement corpus
There is no standard size for any two persons. But it should be enough that even if you get conservative returns, such as 5 per cent on it, your corpus should not run out throughout the life. The basic fundamental is that the rate of growth of the corpus should be higher than the rate of inflation-adjusted withdrawals.
Retirement corpus calculation
Current Age: 30 years
If you're 30 years old now and want to receive a value of Rs 30,000 per month at the age of 60 (30 years later), here's what you need to know:
Inflation rate
The standard inflation rate for the calculation will be 6 per cent annually.
Inflation impact
Due to inflation, the value of Rs 30,000 today would be equivalent to Rs 1.72 lakh per month at age 60 to maintain the same lifestyle.
Corpus required
To generate Rs 1.72 lakh per month at age 60, you will need a total retirement corpus of Rs 4.12 crore.
Annuity rate
Assuming an annuity rate of 5 per cent at age 60, this corpus will provide the monthly income of Rs 1.72 lakh.
Calculations
| Scenario 1: Current Age – 30 years | Equivalent value of Rs. 30,000 at Age 60 i.e. 30 years from today | Total Corpus Required | Assumed Annuity Rate at age 60 @ 5% |
| *Assumed Inflation till age 60 i.e. next 30 Years @6% | 1.72 Lakh/Month | 4.12 Cr | 1.72 Lacs / Month |
Calculation Chart Courtesy: Max Life Pension Fund Management