For a 25 year old who needs Rs.30000 per month today to run his household would require Rs. 1.28 lacs per month after 25 years if inflation is assumed at 6%. This comes to Rs.15.45 lacs per annum. Now if one assumes to earn 10% return post retirement, he needs Rs.1.55 crores just to meet his monthly household expenses.
|Monthly Expense||Rate of Inflat ion||No of yrs for retirement||Future Value|
|Rs. 30000/-||6%||25||Rs. 1.28 lacs|
You need to plan for retirement because:
- Traditional avenue of savings are not sufficient to meet retirementexpenses.
- Rising cost of living.
- With higher life expectancy you need to provide for around 30 years of your retired life.
- Not all of us are covered under pension schemes.
- No social security system in India like in the USA.