Retirement Calculator: How Much Money Do You Really Need to Retire? | SIP, SWP | CA Rachana Ranade

[00:00:00] Hey folks CA Rachana Ranade here and I welcome you all to a very important video which is about retirement. Because typically when you hear this word there are two sets of people who have two different questions to answer. If you are already working somewhere, if you are a working professional, you are a satellite person, you are a business person, in that case you always have a doubt in your mind as to how much money should you save and invest right now so that you can peacefully retire at a certain age. Whereas there are some other sets of people who might be at the brink of retirement and they are not pretty much

[00:00:29] sure on whatever money they have saved till date, would that be enough during their retirement age. So for that we are going to understand how to do the calculations in a very simplified manner. Video is going to be extremely important so keep on watching it till the end. So to volunteer for the entire retirement planning I have one Ajibai here right now who is going to play Ajibai who is just 22 years old but Ajibai what's your age?

[00:00:58] I am currently 68. Okay and how much money have you saved for your retirement? Calculating funds and gratitude it's around 1 crore. Overacting 5% cut. Okay how much? 1 crore. 1 crore okay. Now how much do you feel would I mean what could be your monthly requirements?

[00:01:28] How much money would you need every month to take care of your monthly expenses?

[00:01:35] It's around 60,000 rupees. 60,000 rupees okay. It's very hard for me to ask this question but we say you live in 1000 years in India we say Shatayoshi Uha in Marathi but I have to ask this question for how many years do you expect to be in retirement? How many more years post 60 do you believe that you will live?

[00:02:02] I am expecting 100 years but that is not possible I think so more 20 years I can live. Okay okay so we'll take this as 20 years again. Now comes an important point how much is the expected rate of return on investment? Where would you want to invest this 1 crore rupees? Stock market?

[00:02:24] No I have already a BIPI problem. Okay so where would you want to invest? Mutual fund and FD. Okay so if we were to balance it out let's say 50% in mutual funds 50% in FDs. Ideally you can expect a 9% return.

[00:02:41] So but let's okay let's let's take 9% return that is what you can ideally expect. My calculator has an inbuilt 8% but what is that I'll talk about that later. Right now we'll take 9% and of course whatever money you are planning to withdraw right now per month.

[00:02:59] I hope you understand that this same money will not be enough every single year because of one point which is called as inflation. Right now please believe me inflation is 6% right now so I'll keep this same 6%. What do you feel? Will this money be enough for you or you are doubtful? Little bit doubtful. Little bit doubtful. Okay and your doubt has come true. Unfortunately you'll run out of money in 18 years and 1 month. Oh gosh. Oh gosh. Now what is the solution?

[00:03:29] I think I have to maintain good relationship with my daughter-in-law. Okay that anyways you can keep but otherwise by the way all this is unscripted. Our Showni is on fire today. Okay but anyways you can maintain good relations or could you just rethink if you can pull down your monthly expenses. For example right now you might be going by rickshaw to your office. Anyways you're not going to spend that much afterwards.

[00:03:55] So let's cut down your expenses a little bit from 60,000 to how much can you cut down? 55. 55. Okay. And if that be so you will have money for more than 20 years. In fact you'll be left with 7,66,000. Would you want to give this to your daughter-in-law in that case? No not at all. I will increase my expenses. I will increase my expenses is what she says. Okay.

[00:04:22] No worries. So I hope you have understood how to ensure that whatever money you have saved, whatever money you have kept for your retirement, how will you check for how much years can that be enough? What do you have to do? A quick recap. First and foremost write down how much money you have saved for retirement. How much would be your monthly expense at the time of retirement? So let's say at the age of 60, how much would you be spending per month? How many more years would you want that money to be spent?

[00:04:52] The return of investment and very important you will have to also increase that monthly expense by some percentage. Of course that is your inflation. That will tell you how much years would your money last? So if that is understood now we can go on to JJ's question. To JJ's question basically. JJ if I may ask what is your current age? I am currently 27 years old. Okay. You are currently 27 years old. Okay. Right. At what age would you want to retire? 60. 60. Okay.

[00:05:22] And how much do you spend each month right now? Considering that you are married. Don't try. Considering that you are married how much would you spend? More or less 50,000. More or less 50,000. Okay. And how much do you have in your saving right now? Close to 8 lakh rupees. Close to 8 lakh rupees. Nice. Okay. Now again the same old question like we asked granny that would can I keep that same age for you as well? That you will.

[00:05:52] Yeah, sure. Yeah, sure. Okay. In that case you will need 6 crore 67 lakhs at the age of 60. Sounds steep. It's it sounds more. It sounds a lot right? Sounds steep. But that can be achieved with a small SIP of 7,567 rupees per month. That is it. Or if you feel even that is steep.

[00:06:20] Especially for those people who believe that I will increase my investment with my increasing income. In that case there's a very nice concept which is called a step up SIP. What you can do is you can start with 2747 or 2750, 2800 whatever as of now. And then increase your SIP amount by 10% every year. With that you will be able to achieve the same amount without any worry. So I hope you have understood SIP is important for whom? SWP is important for whom?

[00:06:49] SIP is for working individuals. SWP is for those who are in retirement and want to ensure whether this money will last or not. Before we wrap up today's video any final thoughts? Granny any thoughts? Any doubts? I have already started dreaming about my dream vacation. Oh, dream vacation. Where do you want to go? Amsterdam. I am doing skinning and sky jumping. Sky jumping and skiing and scuba diving. Adji, is there insurance for me?

[00:07:20] Okay, anyways. She has already planned for scuba diving and sky diving and whatnot. But remember that whatever planning we have done that's only for retirement. If you want to incorporate all your dream vacations you need a bigger pool of money. In that case, you will have to increase your expenses and then plan for your retirement. So this is pure play retirement fund calculator. This is only for your day-to-day expenses and current lifestyle that we have planned for. Okay.

[00:07:46] No extra luxurious trips which are not a part of your current expenditure. I hope Granny this is clear. Jay, any final doubts? Yeah. The calculation sounds really good. But what if I want to cross check it? Cross check that. Oh, Jay is not really trusting my calculator. No worries. I can. I'll get you covered for that. So if you want to cross check whether whatever amount we calculated, would that really be sufficient or not? See, what we have done that he is going to retire at 60.

[00:08:15] At 60, he needs this much money. And ideally, we have told that he should ideally live till 80. So at the age of 80, he should be barely left with any money is what our calculation will give as a proof check as a cross check. So let's see. This is what he's going to need at 60. So I'm just going to copy this and we'll paste it. How much money you have at 60, right? Then we need a monthly amount here. So your first monthly withdrawal is going to be this. So let's say I put this amount here.

[00:08:44] You're going to require this withdrawal for next 20 years. Okay. The expected rate is 9%. But like the point that I told you, 8% is what you'll understand right now. So with this, Jay, you'll be still with, still you'll be left with 3 crore rupees. That's a very good buffer to have, but not the kind of calculator that, this should not be the amount as per the calculator, because then I am doing way more than I require this money. Okay.

[00:09:13] So what have I done for this SWP calculator to be a little bit more cautious? I've said that you will get only 8% return on your investment while you are planning for your retirement fund. So here more on debt, very less on equity. And in that case, he'll be left with only 451 rupees. So you just put 50 rupees additionally from somewhere, get it, put it in that envelope, gift it to someone and exit. He's saying, okay.

[00:09:43] But as I mentioned, 8% is on a lower side. That will tell you that our calculation is perfect. But ideally, you can also expect 9%. That leaves you with a big, big cushion. Okay. So I hope you have got your doubt cleared. And I hope you all also have gotten your doubts cleared. Two quick disclaimers. Number one, we have not considered the taxation impact because that will keep on changing. And number two, we have not taken any sudden expenses into picture. Like if you feel all of a sudden, I want to go for bungee jumping and skydiving and whatnot, that is not covered. You will have to increase your expenses accordingly.

[00:10:13] If let's say there is a big medical emergency or whatever, that is also not covered. Ideally, that should be covered by your insurance. So I want everyone to use this calculator. Whatever doubts you have, please ask me in the comment section and we'll be more than happy to help you out. Please don't forget to share this video with your friends. Ask them also to put their own funds, whatever they have. Let them calculate this and be sure about how much money you need for retirement. It's always better to be sure rather than keep on guessing this number.

[00:10:41] I hope you found a lot of value in today's video. If you did, please don't forget to smash the like button. Please don't forget to share this video with your friends. I'll see you in the next one and then take care. Jai and bye-bye. You might have come across such advertisements on various social media platforms. Please note, all of these are fraudsters promising unbelievable returns through StockTips. I don't provide any calls or advisory services. I provide only educational content through my social media handles

[00:11:10] and through my website rachanaranade.com and rachanaranade.in.