I am 36 years old and have savings of Rs 40 lakh. Can I retire in 14 years?

I am 36 years old and professionally employed. I have savings of Rs 40 lakh. Will I be able to retire at 50 years with my current savings? My monthly household expenses are around Rs 15,000.

Rushabh Desai Founder, Rupee With Rushabh Investment Services: If you invest Rs 40 lakh in equity for 14 years, at 12% CAGR return, you will accumulate approximately Rs 1.95 crore before tax.

Factoring in an annual inflation at 7%, your monthly expense of Rs 15,000 will rise to around Rs 38,000 after 14 years. Assuming you live till 85 years, which is 35 years away, and considering the above accumulated corpus, 7% inflation and a conservative annual return of 5%, you are likely to exhaust your capital before you are 85 years old.

To retire at 50 years, you need a corpus of around Rs 3 crore. Note that all these calculations are pretax and theoretical; investment returns, inflation and expenses will fluctuate over time.

Retiring at 50 years looks difficult for you with your existing savings and it is advisable to keep a higher retirement corpus of around Rs 5-10 crore, depending on your expenses. To achieve this, you should save and invest as much as possible via the mutual fund SIP route, excluding your existing savings, and increase your SIP contributions by 5-10% annually, keeping your expenses in mind.

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