Okay, Mowgli, retirement season is next. Yeah, that wonderful period
where you don’t have to please Karen from HR anymore or fake laughing
when the boss makes a bad joke. It’s all sitting on the beach and drinking
cocktails, or maybe watching The Office for the tenth time, anyway? But
wait… before you basically book your one-way ticket to become a
permanent island resident, we need to talk about the G word—money. How
much should one save to retire in order not to become a meme of a broke
retiree?
Buckle up, buttercup! Well, there are a couple of minutes before we
dismantle retirement planning in the Gen Z style—humor, simplicity, and
references to memes, if not the actual ones.
Step 1: Have you ever taken the time to decide just what a perfect
retirement is or should be to you?
First things first: What’s your retirement vibe? Are you dreaming about a
Goa beach house, or are you dreaming more about sitting on a cozy flat,
drinking tea, and watering some plants that you actually remember that
you have?
Here’s a little formula to help figure out what kind of life you’re aiming for:
The formula for Budget Your Bliss is Netflix Subscription + Coffee + Travels
to Bali = monthly expenses x 12 months x lifespan (let’s say lots, okay).
Example time: For instance, if your brand is all about ‘The Travel Life’,
which is actually a brand. You will travel twice per year, and each trip costs
₹ 50,000. Therefore, merely for travel expenses, ₹50,000 x 2 = ₹1,00,000
annually. Include your yearly expenses for shelter, fun, doctor visits (worst
excuse ever, folks), and the precious avocado toast. There you have it; your
perfectly unique retirement cost structure is starting to emerge.
Step 2: How Much You’ll Need (or How to Avoid The Old Geezer
Broke Edition)
Let’s get one thing straight. Nobody wants to go to retirement and find out
that is the only thing they can afford to eat for the next three decades. Well,
the question that immediately follows is, How do you determine what is
adequate? Enter the 4% rule.
Sounds a little like this abstract math thing, but you know it’s really just
math at a high school level (the stuff you swear you will never use). You see
the 4 % rule for instance, which means you are allowed to spend 4%
annually of your retirement corpus. Thus, if you save ₹ 1 crore (remember,
we’re going large here), that means you can afford ₹ 4,00,000 to spend a
year. But split that on a monthly basis and you’re left with around ₹33,000
to go bonkers on things you need and some things you want.
Because if you’re currently picturing yourself living on ₹50,000 a month,
you will instead require around ₹1.5 crores to retire without having to think
about how much it’s going to pinch every time you buy something from
Amazon.
Step 3: By now, you are hopefully aware of the idea that
compound interest is one of the most powerful forces in finance.
Okay, let us get back to where the money actually starts to make more—this
is known as compound interest. Basically, it is like your savings flexing
muscles while you are asleep. Starting as early as possible, the more
profound your money’s power will be.
Example: Imagine you put ₹10,000 every month from age 25 to an average
return of 8% (realistic), but hey, who’s hoping for better returns? No one).
You will be surprised at how your money will grow within two and a half
decades and you will have ₹2.3 crore lying in your account by the time
you’re 60. Well, that’s the beauty of compounding right there. It is like the
most concealed aspect of a financial plan.
But if you wait until you are 40 years old to start? Oof. That is, you will have
only about ₹ 91 lakh. The moral of the story is: Begin today and do it little
by little. Your future retired self will thank you.
Step 4: Inflation—Your Sneaky Enemy
Ah, inflation. You know the thief that tends to steal your buying power in
the long run. Some products that cost ₹100 today might go up to ₹200
tomorrow and by the time one is 60 years, consider what it may cost to
procure a similar product. That’s why you cannot just hide your money in
your mattress and rest assured (mind you, I have never slept on money).
It’s uncomfortable).
Imagine you are surviving on ₹ 50000 a month today. If inflation remains
at about 6% on average, that₹ 50,000 will have to be more like₹ 1,60,000
after 30 years. Mind-blowing, right?
How do you beat inflation? By investing! One’s investments, whether in
equities, mutual funds, or even real estate—any asset that increases your
wealth at a rate higher than inflation devours it.
Step 5: Emergency Plan/For Emergencies/When Something
Unexpected Happens
Do you recall how everyone believed 2020 would be the year for them? And
then… yeah. Life being dynamic and uncertain, your retirement should be
too—ready for the twists and turns of life.
Things like health insurance because, hey, you’re not a centaur, auto
insurance, that pesky medical bill that comes out of nowhere or that
irresistible need to skydive now that you’re all retired and whatnot.
It’s okay if you wish to pad your savings a bit more—you’ll need another
layer of protection for the plot twists in your life, Netflix-style.
Step 6: So, never lose sight of the fun while trying to live this
kind of life.
Retirement planning is not about being the human replica of Scrooge
McDuck, the rich and eccentric duck in Disney’s cartoon, who loved diving
in his piles of wealth. You don’t have to pinch every rupee and deny yourself
nice things now just because you want to be prepared for the future.
Balance is key.
It’s good to indulge in anything that in some way makes life enjoyable but
make sure not to lose sight of what’s important. You know, so you can keep
treating yourself when you’re 65 and not working. Learn how to live in the
present while putting money aside for future use.
Bonus Tips for Future-Proofing Your Retirement
- Diversify, Diversify, Diversify: Don’t put all your eggs in one
basket—invest in different things. Stocks, mutual funds, real estate. If
one crashes, the others (hopefully) pick up the slack. - Emergency Fund: Have 6 months’ worth of living expenses stashed
away. You know, just in case aliens invade or something else goes
wrong. - Retirement Accounts: Think NPS (National Pension Scheme),
EPF (Employee Provident Fund), PPF (Public Provident Fund), or
other tax-saving investments. More money, less tax? Sign me up.
Final Thoughts: Be the chill retiree, not the “Oh no, I’m broke”
retiree.
Look, I get it—retirement planning isn’t exactly the most exciting topic on
the planet. But trust me, your future self will be doing cartwheels when
you’ve got a solid plan in place. By figuring out how much you need, letting
compound interest work its magic, and keeping inflation in mind, you’ll be
ready to retire like a pro.
So, whether your dream is to travel the world, open a cute little café, or
simply chill in your cozy corner of the world, you can make it
happen—without stressing about money.
Now go forth and be the retirement-planning hero you were meant to be.
Future you is already proud!