Is 1 Crore Enough to Retire In India
For many 1 Crore is a dream number, they think that once we reach that number they can retire peacefully. Now the problem is 1 Crore though is a big number but it's not sufficient to retire in India. People think that if they have 1 Crore and if they keep investing in equity and get 12% returns, that means they can get 12 lakhs in a year or 1 lakh in a month. And that 1 lakh is sufficient for their expenses.
Yes 1 Crore is a bug number but when we break down it, we don't get a big number monthly. Now 1 Crore you cannot keep it in the equity if you want to retire so realistic returns would be 8 to 10% and say you get only 8% returns that means 8 Lakhs in a year and or around Rs 65K per month. Now 65K is a big number today but what after 15 years. There is a inflation which is around 6% so your 65K today will become just 30K in 10 years and so on.
I have created a excel sheet, which you can find in the description. And 9nce you put the 1 Crore money, 6% inflation and 8% returns you will find that the money 1 Crore will be empty by 13 years. Now even of you increase the returns to 10% the money will last only 21 years which is not enough for the retirement. You can try to reduce the expenses today but the inflation of medical and education is quite high. So having the buffer is required.
So 1 Crore is like a buffer which can help you to comping faster but it is not sufficient to retire early. You cab run the numbers itself and find out how much is required for your retirement.
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That 13 year runway at 8% returns and 6% inflation really hits home. Inflation eats rupees faster than I eat samosas, so a bucket plan helps, with five to seven years in safer debt and the rest in equity to refill after good years. Did your sheet account for taxes and higher medical inflation or was it a flat 6% across categories?
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These days inflation keeps going up and interest returns keep going down.
At least if 12% is there it is okay; Malaysia interest returns area round 2.5% to 4% only.