Are you saving enough for retirement? How to overcome the hurdles that prevent you from investing for this crucial goal
corpus of Rs.10.5 crore to sustain inflation-adjusted withdrawals till the age of 85. To build this enormous nest egg, Nagarajan needs to put away nearly Rs.80,000 every month in avenues that earn her 10% annualised returns. However, the Chennai-based IT professional earns Rs.60,000 per month and spends nearly all of it. “If I start saving for retirement, I will have nothing left to spend,” she says.
Many people dream of a care-free retirement, with lots of spare time and enough money in the bank. This dream may remain just that if you haven’t saved enough. The road to building an adequate nest egg is full of pitfalls. Topping the list is investing less than you need to. A 30-year-old, aiming at a retirement income of Rs.50,000 a month, will need to invest Rs.35,000 a month for 30 years to live comfortably till the age of 90. Invest less than this amount and your nest egg will be finished in no time (see graphic). “Under-funding of retirement corpus is a common problem. People don’t realise this until much later, when money starts running out,” says Abhishek Kumar, Founder & Chief Investment Adviser, SahajMoney.
No more nudges
It is here that compulsory savings play an important role. The mandatory monthly contribution to retirement plans, such as the Employees’ Provident Fund and the NPS, means that salaried people are putting away at least 12% of their income towards retirement. Add to this the tax-saving investments under Section 80C, which force many people to put away money in long-term investments.
Investors looking for twin engines of quality and growth.
However, not all salaried people are covered by the EPF, nor is everyone contributing 12% of basic pay to retirement fund. An increasing number of people are
Read more on economictimes.indiatimes.com
