A reader says that he has realized the importance of retirement planning only at age 35 and his current net worth is essentially zero. He would like to retire by age 55 and wants to know how to go about it.
With twenty years to go, there is a good chance of accumulating enough corpus for retirement. If necessary, one can consider an extension up to age 60. Let us find out using the freefincal robo advisory tool.
- Current monthly expenses that will persist in retirement 50,000
- Additional Annual expenses that will persist in retirement 50,000
- Age at the end of the current year: 35
- Age you wish to retire 55
- Years to retirement 20
- Total average monthly expenses (annual/12) 54,167
- Inflation before retirement (%) 6
- The assumed life expectancy of a younger spouse: 90 (spouse is aged 30)
- Inflation during retirement (%) 6
- Years to retirement 20
- Monthly expenses in the first year of retirement 1,73,720
- Years in retirement (until younger spouse reaches age 90) 40
- The Corpus required for retirement: 6,38,05,162 (that is 6.38 Crores)
- monthly investment required, including EPF/NPS contributions (scroll down to see investment schedule): 1,02,762
- If the investments can be increased by 5% each year, the initial monthly investment will be: Rs. 70,870
- If the investments can be increased by 10% each year, the initial monthly investment will be Rs. 46,275
- If the retirement age is increased to 60, the corpus will increase to Rs. 8.24 Crores. This may be counterintuitive and is explained here: Retire early to lower your retirement corpus!
- At a 10% increase each year, the initial monthly investment will be Rs. 30,706.
Thus the reader can adjust his retirement goals according to his investment capability.
The asset allocation schedule is given below, along with the variation in the expected portfolio return.
The retirement calculation uses a five-bucket strategy (this example assumes retirement at age 60):
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- An emergency bucket to handle unexpected expenses.
- An income bucket providing guaranteed income for the first 15 years of retirement. During this time, investments are made in the following three buckets.
- Corpus from a low-Risk bucket that provides income from year 16 to year 25 in retirement. To provide this income, the low-risk bucket will have an asset allocation of 30% equity and 70% debt during the investment period (years 1 to 15 of retirement).
- Corpus from a medium-risk bucket will provide retirement income from years 26 to 30. To provide this income, this bucket shall have an asset allocation of 50% equity and 50% debt during the investment period (year 1 to year 26)
- Corpus from a high-risk bucket will provide income from year 31 to 35 in retirement. To provide this income, this bucket shall have an asset allocation of 70% equity and 30% debt during the investment period (year 1 to year 34)
In summary, the reader can still accumulate enough corpus for retirement, provided he can stick to the investment schedule either for retirement at age 55 or 60.
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🔥Join our community of 9000+ users! 🔥 Use our Robo-advisory Tool to create a complete financial plan! More than 3,500 investors and advisors use this! Use the discount code robo25 for 20% off. Plan your retirement (early, normal, before, and after), plus non-recurring financial goals (such as child education) and recurring financial goals (such as holidays and appliance purchases). The tool helps anyone aged 18 to 80 plan for retirement, plus six non-recurring and four recurring financial goals, with a detailed cash flow summary. Our Flagship Course! Learn to manage your portfolio like a pro to achieve your goals regardless of market conditions! More than 3,500 investors and advisors are part of our exclusive community! Get clarity on how to plan for your goals and achieve the necessary corpus no matter the market conditions! Watch the first lecture for free! One-time payment! No recurring fees! Lifelong access to videos! Reduce fear, uncertainty and doubt while investing! Learn how to plan for your goals before and after retirement with confidence. Join the freefincal investor circle! An exclusive space for investors, advisors, fintech employees and students to access financial planning and insurance tools, mutual fund and stock analysis tools, coding strategies and Excel macros for data extraction. 750+ members are now part of our investor circle. Increase your income by getting people to pay for your skills! More than 900 salaried employees, entrepreneurs and financial advisors are part of our exclusive community! Learn how to get people to pay for your skills! Whether you are a professional or small business owner seeking more clients through online visibility, or a salaried individual looking for side or passive income, we will show you how to do it by showcasing your skills and building a community that trusts and pays you. (Watch the 1st lecture for free). One-time payment! No recurring fees! Lifelong access to videos! Track your mutual funds and stock investments with our Google Sheet! We also publish monthly screeners for- Equity mutual funds
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Now watch Let's Get Rich With Pattu தமிழில் (in Tamil)!About The Author
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Dr M. Pattabiraman (PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. He has over 14 years of experience publishing news analysis, research and financial product development. He is a patron and co-founder of “Fee-only India,” an organisation promoting unbiased, commission-free, AUM-independent investment advice. Connect with him via Twitter(X) LinkedIn YouTube Pattabiraman has co-authored three print books: (1) You can be rich too with goal-based investing (Published by CNBC TV18) for DIY investors. 
This book helps you ask the right questions and find the right answers. It also includes nine online calculators to create custom solutions.
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Most investor problems stem from a lack of poor decision-making. We made bad decisions and money mistakes when we started earning, and we spent years undoing them. Why should our children go through the same pain? What is this book about? As parents, what if we had to groom one ability in our children that matters not only for money management and investing but for every aspect of life? My answer: Sound decision-making. So, in this book, we meet Chinchu, who is about to turn 10. The story follows what he wants for his birthday and how his parents plan it, while also teaching him key ideas about decision-making and money management. What readers say! 
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