Jay : Veeru, I’m planning to retire in 2040, in next the 20 years.

Veeru : Wow !!! Great to see you planning for your retirement today. It is a good idea to start planning early.

Jay : Do you know, if today my monthly expense is Rs.30,000/- what will be the monthly amount I would need after 20 years?

Veeru : Oh, that’s a real smart question Jay. Let me calculate…You will need 1.16 Lakhs per month.

Jay : Are you kidding me..

Veeru : No dear, I don’t intend to do so.

Jay : How is this even possible?

Veeru : How old are you Jay?

Jay : Hmm….I’m 35 years. But why?

Veeru : Just try to recall if not possible ask your parents what was their Monthly expense when you were 15 years old, that is 20 years back?

Jay : Oh I think I know the answer. It was around 5000/- per month.

Veeru : So do u realize something?

Jay : Hey what??

Veeru : In 2000 an average Home Expense was around Rs. 5,000 which is now increased to average of Rs. 30,000 In addition to the regular home expenses, we have a lot more spending avenues and don’t you dare forget the Inflation which is the important factor.

Jay : Oh no

Veeru : Why are you so sad?

Jay : This morning, I thought to myself, that I should plan for an early retirement. So I checked my savings & investment and I found that I will have almost a Crore Rupees Corpus after 20 years, including my Provident Fund savings. But after this conversation I realize this amount will not even suffice me for 8 years .

Veeru : Oh ok, I’m Sorry to have disappointed you. But may I know how you calculate that 1 Crore is enough for your Retirement?

Jay : I calculated based on today’s expenses I need 30,000/- per month, so for a year 30,000*12 = 3,60,000/-
And post retirement life of 30 years so;
3,60,000*30 = 1,08,00,000/-

Veeru : Oh I see, so you too made the same Mistake which many people do and they get disappointed when they reach their retirement age.

Jay : I guess I need you to explain the way retirement calculation is done in detail………

Veeru : Not now, our Tea Break time is over, I will discuss next time.. Now I had to go to my desk. I have little work to be urgently completed today. I will give details of my Financial Planner, they will guide u through the entire process of Personalized Financial Planning. It is an extensive & personalized work to be done & not to be discussed over a Tea Time Break bro. I have done my Investments & Insurances through them for years. I Trust them.