The answer to how much money you need to retire can simply be calculated as below.
If your monthly expenses are Rs 50,000 a month. And you invest your corpus in the stock market assuming 15 % returns then all you need is Rs 50 lakhs as a corpus. You will also have Rs 1.5 lakhs a year surplus which you can invest to build a corpus to beat inflation.
If your monthly expenses are Rs 100,000 a month. You would need Rs 100 lakhs corpus.
It does not matter if you own a house or not because it will become part of your monthly expenses. But yes you should have a health insurance, a life insurance & education cover for your kids higher studies in your monthly expenses.
If you get returns of only 10% the corpus changes to 75 lakhs for Rs 50,000 monthly expenses. For Rs 100,000 monthly expenses this will become 150 lakhs. So where you invest your money can change your corpus by 50-100%
Now if you foresee your expenses will keep increasing then you can make changes accordingly. You can also add a contingency fund for the same. This could increase your corpus by 5-10%. But if you have planned well you would not need it.
This is where budgeting & expense management comes in. I remember I used to track every rupee spent & analyse the expenses at the end of the year.
You can even plan & add a shopping budget or holiday budget & go within the budget. I was able to manage my budget when I was earning Rs 10,000 a month or Rs 100,000 a month. I just changed my monthly expenses accordingly.
If you save 50% of your salary you can build your corpus in 15 years easily investing in stocks.
Thoughts?
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