How Much Money Do You Need To Retire?

Did you know that only 1 out of 3 Indians actually save money for retirement? This means that a whopping 12 Cr Indian working professionals do not save for retirement!

Surveys show that 7 out of 10 Indians think that their children will take care of them after retirement. Both these stats highlight that we need more education on saving for retirement.

In this story, we will walk you through the ideal age to retire and the amount of money you might need, and the investment options that can help you lead a comfortable post-retirement life. Read till the end to know more about investment options for retirement.     

What Is The Right Age To Retire?

There is no “right age” to retire but in India, the retirement age for working professionals is 60 years while central university employees may retire at the age of 65 years. But does this mean that you should retire at 60 or 65? Not actually.

If you have enough channels of passive income, savings and investments, the age of retirement doesn’t really matter. The conversation moves on to the kind of lifestyle that you want to lead once you retire. 

How Much Money Do You Need To Save To Retire?

According to experts, you should have at least 80% of your final per annum income saved up to lead a comfortable retirement life. For example, you want to retire at 40. Your final P.A income is ₹1,00,00,000. You would need at least ₹80,00,000 per year for a convenient life. 

So knowing the various saving rules for retirement income planning can be very useful.

Experts suggest that you should have saved up the following amount to hit your retirement goals after the age of 60:

1. 40 years old: 2x annual salary

2. 50 years old: 4x annual salary

3. 60 years old: 6x annual salary

4. 67 years old: 8x annual salary

You can achieve this comfortably by following the 50-30-20 rule.

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How Much Should You Invest Now If You Want To Retire?

It's never too late or too soon to start your retirement planning. Depending on your current financial situation and age, the following tips can be useful for you to set up an investment plan for retirement right away:

1. Evaluate your current financial situation

Assess how much money you have saved versus what you will need. You can use the conservative savings formula or reverse engineer the estimate by using the 4% rule. 

The 4% rule gives you an idea of how much money you can withdraw from your retirement savings per month (4% of the total amount) while maintaining a healthy balance and investments. 

2. Pay attention to your income sources

Additional income can boost your retirement savings. This could include passive income generation through assets such as real estate, stocks, mutual funds, P2P lending among others.

Most working professionals do not have the luxury of a pension. Instead, you can pay your future self with wise investments that give you dividends and high interest rates. 

If you have not already started investing or want to know more about investing in mutual funds, Indian stocks, US stocks, P2P lending, and more, download the Cube Wealth app today.   

3. Create retirement goals

Investing based on goals is a must. The same rule applies to creating a nest egg for your retirement. Decide on:

1. The money you should have saved up on your retirement day.

2. The daily, monthly, and weekly expenses that you might have to churn out post-retirement. 

3. Take into account emergencies, trips, and other such events.

4. Future investment opportunities and the capital you might need for it.

5. The money that you might need to maintain assets like your house once you’re relaxing at home. 

Consult a retirement planner or a qualified professional to help you chart your future expenses and current savings. 

4. Set a date

Your retirement date may not be as special as your marriage day or the first time you bought a car. But it’s still important. 

Having an idea of when you will retire can help you prepare for scenarios where you may have to retire early or later than expected. 

A tentative retirement age can even help you plan your investments around high-risk assets like small-cap stocks, IPOs, DIY US stocks, and more. 

5. Consult an advisor

Planning for retirement is not as complicated as some might think. But it’s still pretty difficult to do if you have a full-time job.

More than being difficult, it’s important to create the perfect roadmap to retirement by identifying the right investment options based on your risk tolerance and investment goals. 

A good wealth coach or a retirement planner can help you pay your future self using the right assets that work for you. Their industry experience and track record can help ease the stress you might have about your retirement plan. 

7 Investment Options To Generate Wealth For Retirement

1. Mutual funds

2. Indian stocks

3. US stocks

4. P2P lending

5. Digital Gold

6. Fixed Deposits (FDs)

7. Exchange Traded Funds (ETFs)

Invest in US stocks for as low as $1

Summary

Retirement planning requires careful planning and execution. Make sure that you have a retirement date in mind. But be cautious of scenarios where you may have to retire early or late. 

Plan for your retirement savings by setting aside money. Compare where you are to the conservative estimates that experts suggest for every age bracket. 

The 4% rule can also be helpful for retirement planning. Research as much as you can before you start a fund or savings account for your retirement.  

Consult a wealth coach or a retirement planner to invest in assets that can generate passive income. These assets can include investment options like mutual funds, stocks, digital gold, FDs, ETFs, and more. 

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FAQs

Q. How much should you have saved for retirement by age?

Ans. Saving for retirement by age depends on your retirement goals, income, and other aspects. A one size fits all approach may not work. However, financial experts suggest these numbers that can serve as a good benchmark:

1. 40: 2x annual salary

2. 50: 4x annual salary

3. 60: 6x annual salary

4. 67: 8x annual salary

Investing in the right investment options with the right investment advice can go a long way towards helping you achieve your retirement financial goals. Explore the powerful Cube Wealth app to know more about the right investment options.