Retirement planning for 34 year old naive investor2 min read . Updated: 14 Nov 2020, 12:26 PM IST
I have not started saving for my retirement yet, except for a few fixed deposits here and there.
I am 34-year old, living with my wife and two kids. I have not started saving for my retirement yet, except for a few fixed deposits here and there. I don't know how much money should I aim for my retirement goal. Should it be 1 crore or 2 crore or how much will be enough. Currently, I am spending around 60,000 per month for four of us. Kindly guide. Also, where should I invest and how much should I invest to achieve the target corpus?
By Divam Sharma, Co-Founder, Green Portfolio
Your current yearly spending is ₹7.2 lakh per annum. After retirement, you would be saving the money which at present you spend on your kids, as they will become financially independent by then. Let's assume, you would save 60% of your total annual expenditure i.e. ₹4.32 lakh per annum. If you plan to retire at an age of say 60 years and with an inflation of 5%, you should be requiring a yearly spending of approx. ₹23 lakh.
To fund this amount, you would require a corpus of at-least ₹4.5 crore to ensure a similar lifestyle, considering future inflation and a life expectancy of 80 years.
Considering that you have 26 years to retire, we suggest a higher allocation to equities and a gradual conversion of funds from equities to debt in the last five years before retirement.
To create a corpus of ₹4.5 crore at the end of 60 years and considering an average compounding of 10%, you need to save ₹30,000 per month for the next 26 years.
We suggest that you invest 10% of this saving in SBI Magnum Gilt Fund- Growth, 10% of savings in Nippon India Gold Savings Fund- Growth and remaining capital equally in
> Axis Smallcap Fund- Growth
> Axis Midcap Fund- Growth
> Nippon India Index Fund-Sensex Plan- Growth
> Quantum Long Term Equity Value Fund- Growth
We would also suggest you to take a term plan and a medical insurance policy to ensure that any exigency is taken care of.
You should also regularly assess your investments and can also take guidance from a SEBI Registered investment advisor.
(Views expressed by the investment expert are his own.)