PROSPERR.IO

The idea of working until your golden years isn't exactly appealing. But the dream of early retirement in India, with a Rs. 5 crore corpus to fuel your adventures, can feel out of reach. 

But how long will it take to reach a coveted Rs. 5 crore corpus? This blog dives deep into these questions and equips you with the knowledge you need to know.

How Much Corpus Do You Really Need? 

The concept of a traditional pension system is evolving in India. With an increasing number of individuals opting for private jobs or entrepreneurial ventures, relying solely on social security isn't enough. The answer depends on your desired post-retirement lifestyle. Let's consider two scenarios:

Also Read- What is a Retirement Fund? Explained

• Scenario 1: Moderate Lifestyle (Monthly expenses: Rs. 30,000)

Assuming an inflation rate of 6%, you'd need a corpus that generates a monthly income of Rs. 30,000 to maintain your current lifestyle after retirement. This translates to a corpus of approximately Rs. 1.8 crore (using the formula: Corpus = Monthly expenses x 12 / Expected rate of return (adjusted for inflation)).

• Scenario 2: Comfortable Lifestyle (Monthly expenses: Rs. 50,000)

For a more comfortable retirement with higher expenses, you'd require a corpus of around Rs. 3 crore (using the same formula).

But aiming for a luxurious Rs. 5 crore corpus unlocks a world of possibilities – travel, hobbies, and the freedom to pursue your passions.

Reaching the Rs. 5 Crore Milestone

The magic number (years needed) depends on several factors:

• Your Age: Starting early is key! The power of compound interest works wonders over a longer investment horizon.
• Investment Amount: The more you invest regularly, the faster you reach your goal.
• Expected Rate of Return: Equity investments historically offer higher returns, but also come with higher risk. Consider a diversified portfolio with a mix of asset classes.

Here's a glimpse into how long it might take to reach Rs. 5 crore based on different starting ages and monthly investments (assuming a 12% annual return):

Investment Options for Retirement Corpus Building in India

• Systematic Investment Plans (SIPs) in Mutual Funds: A popular choice for disciplined investing with rupee-cost averaging.
• Public Provident Fund (PPF): Offers guaranteed returns with tax benefits.
• National Pension System (NPS): A long-term investment option with tax deductions.
• Employee Provident Fund (EPF): A mandatory scheme for salaried individuals, offering good returns.
• Real Estate: can provide rental income and capital appreciation, but requires a high initial investment.

Early Retirement Planning in India: A Smart Move 

Early retirement planning in India allows you to leverage the power of compounding for a longer duration. The earlier you start, the smaller the monthly investment needed to reach your target corpus.

Remember:

• Increase your investments gradually: As your income grows, allocate a higher percentage towards retirement savings.
• Review your portfolio regularly: Adjust your asset allocation based on your risk tolerance and age.

Conclusion

Building a Rs. 5 crore corpus isn't a fantasy, but a key to unlocking your dream retirement. Take charge by planning your needs, crafting a personalized investment strategy, and consistently contributing, even if it starts small.  

Disclaimer: This blog is for informational purposes only and should not be considered financial advice. Please consult a financial advisor to develop a personalized retirement plan that aligns with your specific goals and risk tolerance.