Is Rs 3.5 crore Enough to Retire in India?

Hi, I'm Monika Hallan, and this is my podcast. Let's talk money. Every Friday, a new episode will drop that gives you a snapshot analysis of one money related topic that has meaning in your life. And then I answer your money questions. My hope is to put you on the path to financial stability and freedom. So let's talk money. The headlines were all over the media, we Indians need three and a half crore to retire. I saw the buzz and found myself shaking my head. How can something as personal as retirement be shaken down to one number applicable to everyone looks difficult, right? So I looked at the source. This data came from Affluent Investor Snapshot 2025, which is the title of the report, which is the second annual report from HSBC Bank. Fair enough. They've done a report. All right. So this is a global study which analyzes the investment portfolios, behaviors, priorities of affluent individuals worldwide. I think their intent was not to shake it down to one number, but to a much larger conversation. But you know how it is. Something gets picked up by the media and then they run with it. So this HSBC study, this was conducted in March 2025. It surveyed almost 11,000 affluent investors across 12 markets across 12 countries in the world. And their target demographic was individuals aged between 21 to 69 with investable assets ranging from 100,000 US dollars to 2 million US dollars. So that was the landscape at which they're looking at. In India, the study was based on a thousand and six affluent investors, a thousand and six in a population size of several million who will qualify to be affluent. So you see where I'm going there. Look, estimating a retirement corpus is a difficult task and it's difficult because of so many unpredictable factors. How long will you live? What is the life expectancy? People are living well into their 90s. Are you going to be one of them? Or, you know, Yama knocks on your door early. We don't know that. What would the future inflation rates look like? What will be the rate of return on investments? And what kind of changes will happen in lifestyles, in healthcare costs? All of these are unpredictable. At best, you will get an approximation only after you make plenty of assumptions. I use a golden rule. I overestimate life lived. I underestimate returns. I overestimate inflation and then work the numbers out. A lot of the retirement money also depends on lifestyle. So I recently spoke to somebody. He's a friend. He's saying he wants 20 lakh a month at retirement. 20 lakh. I'm saying like, what are you doing? You're drinking tea in pure gold cups. Like, what do you need 20 lakh for? He said, no, I need to spend a few months abroad each month in the year. So I need to provide for that. My corpus isn't rupees, but I'll be spending in dollars abroad. Like I said, each life is different and we cannot predict who wants to do what. So we should never assume that what works for you will work for everybody else. But so today I'm going to give you a way to customize the retirement corpus decisions that will suit your life. It's a direction which you can use to calculate your own retirement corpus. Each number will be different. You have to begin. I suggest you either take a paper pen, calculator or an Excel sheet. You have to estimate what you spend today, no matter what your age, no matter what you're doing. My three bank account system will help you to do that. If you don't know what it is, you have to go back to let's talk money, understand that and then look at what you're spending every year right now. Your spend account will give you that number to start working with. Now you need to inflation adjust it to what you will spend at age 60. There are calculators online, SEBI's website, the link is in the show notes that will have it. My third edition of let's talk money has calculators which helps you do that. So whatever works for you, use that to inflation index what you're spending now to what you will spend when you hit 60. So let's say you got a number of 30 lakh a month at 60. So whatever you're spending now you get a number which says that at age 60 you will be spending 30 lakhs a month. But that's what you'll spend in the first year of retirement. This amount will grow along with inflation. Inflation doesn't take a rest, it doesn't take a pause. So we need a corpus that also grows and keeps ahead of inflation. In my number crunching, I've taken that in the first year post retirement, your expenses are 70% of those in the working life because working life has a lot of expenses. So I have taken 70% of that and then worked out the corpus. So let's add 30 lakh a month, multiply that by 26. So I have used many, many assumptions to this multiple. So this multiple doesn't eat into all of your capital, but it's leaving about half to be bequeathed to your kids. And if you don't have kids, you'll have to find a way of basically making a will so that the money left over has somewhere to go. And there's no solution in my life where I am estimating that your money goes to zero at even age 100. There will always be a cushion, a buffer. We don't know what expenses are in the last 20 years of your life. So you should assume that there'll be something to bequeath. So if we are assuming that you are spending 30 lakh a year at age 60, you will need to target a corpus of 8 crore. 8 crore is looking very, very different from the 3.5 crore the study estimates, isn't it? And remember, what I've done is I've assumed that this money is invested in a portfolio of both equity and debt, because you know that if it's only debt, inflation will begin to eat into your capital. Like I said, you can pick up a copy of the third edition of Let's Talk Money. It's a hardback edition. You can use the worksheets I've put in the book to calculate all of these things. Okay, so I'm leaving a link again in the show notes for you to do this. Now, there's another way to track this. There are some milestones you can look out for as you go along this journey. Very rough rules of thumb. Again, it's going to be rough. By age 40, you should have three times of your annual income in your retirement. By age 50, you should have six times of your annual income. By age 60, so let me repeat that. By age 40, three times of your annual income. By 50, six times. And by 60, eight times of your annual income. I know these numbers look very big, but if you consolidate your assets, you'll discover that you have more than you think. It happens every time. Every time I have asked somebody to put down what they own, they find that they have more. Include your PF, your tax saving investments, include incremental savings, all of that to see what you have. So, I would say be careful when you see these one size fits all numbers. They are usually meant to grab headlines and attention rather than provide any serious direction as to how much you need for retirement. And again, the HSBC study was not trying to predict how much you need. It was a much broader study. It is just that the media picked up this number and ran the story with it. Unfortunate. But that's how it is. Now, on to questions. I have Raghavendra VB on email who says, I have some knowledge on mutual funds and already have been investing for two to three years. I have an important question. For every financial goal, can we have multiple funds or should we not have more than one fund? So, if we tag two or more funds for every financial goal, I'll end up having too many funds. And you said not to have more than six to seven. What should I do? Raghavendra, it's good to know that you're asking second generation questions about mutual funds. So, this is telling me that you're already an informed investor and doing well. And apologies, it has taken so long to get your question. I have a huge backlog and I tend to pick questions that I have not answered before. And those that are more strategy like this one, rather than specific portfolio advice. For specific advice, you need to find a licensed financial advisor who can do a deep dive. Your question is that should you have multiple schemes for similar goals or use just one? You're right. I recommend that you keep your portfolio lean and do not accumulate too many schemes. But how to target different goals? So, this is the way out. Split your goals into three, right? Like I say, short, medium, long term. Now, we are at the long term goal part. Let's say you have a goal of kids education and marriage. Maybe there's one, maybe there's two. And these are between 15 to 20 years into the future. Let's say you've chosen a portfolio with three schemes. You have half the money in a large cap index and one each of mid and small cap funds. Now, what you can do is create separate folios in each of these and earmark them to specific goals. Let's say you're investing 2000 rupees a month for the education of child one. Then all three funds will have one folio each that targets that goal. For child two, you'll do the same. So, you have four folios. If you have two kids mapped to a specific goal, but just three funds. You get it? So, three funds, but each of them will have four folios if there are two children. And each folio is marked to a specific child with a specific goal. That way, you keep the goals visible and separate, but yet use your selected funds because you might have done a lot of research and found the fund that you think you trust for long term. So, why would you choose something else for another child? So, this is the way by creating separate folios, you can use the same fund yet have visibility on the goal mapped to a child or anything else. I would simply write down the folio number and write the goal and the child's name next to it in an excel sheet. So, you can map the progress. I hope that works for you, Raghavendra. Then I have Amit Gujral on email who says, I hope you're doing well. I'm Amit from India and I've been an ardent listener and follower of your podcast for a long time. I must say, Let's Talk Money is one of the best gifts I've given to friends and family. A truly timeless guide to personal finance. Thank you for the incredible work you continue to do in spreading literacy and awareness in finance. I'm currently working with an MNC and have been investing so much in equity mutual funds spread across flexi, small, large and mid-cap and multi-cap funds. Three months ago, I was blessed with a baby daughter and that beautiful milestone has inspired me to plan more intentionally for the future. I want to start a dedicated investment portfolio for her, keeping in mind key life goals such as education, marriage and overall financial security. I'm planning to invest this much per month towards her future. I plan to gradually increase this amount. While I understand the importance of balancing other long-term goals like retirement, I would appreciate if today's advice could focus specifically on building a strong foundation for my daughter. My wife is not working right now so we're managing the household and investment planning on a single income. How should I start? Amit, congratulations on the baby. It's always a time to press reset when a new life comes into the world. I remember when my baby was born a long time ago, I had learned to look at the world again with fresh eyes. It's such a powerful moment for change. So you have the right idea to provide for her future but you need to do several things to secure her today and by that I mean securing yourself financially. I know you want specific to her but her future is dependent on your current stability, your emergency fund, your medical and life covers. You have to get them in order. Now plan for your own future goals and one of these goals is your child's future education as marriage. So I don't know about your other savings ratio but keep the savings ratio for your daughter in line with the saving for yourself. Again, I would just use a mix of large, mid and small cap funds to invest for your child's future if I was in your place today. Because these are long-term goals, she's just been born, you have this long horizon of equity investing ahead of you. So I would pick a portfolio which is made up of half of a large cap index fund and a quarter each in maybe a managed mid and a small cap fund for her future. And I actually have some non-money things to tell you because I think looking at what you're doing already, you'll probably have help in getting your fund choices done. I have some non-money things to tell you. One, do not tell her as she grows how much you have saved for her. This blunts the child's drive and they can become entitled to the money. Two, save in your own name. We really don't know what the child is like at 18 or 20. Today, they are tiny and helpless, but so were you as a baby. Keep the money control in your hand and fund the goals that seem reasonable to you later in life. Sometimes what I say sounds hard, but I'm on the other half of my life and I have seen so many money stories that young parents have shared and stories where parents haven't foreseen what happens with the money they saved. So just a little word of maturity to say that save in your own name, don't build expectations. Of course, plan for her future, but equip her with education and good values. Save for her marriage and education, but maybe not to finance her retirement. You know what I'm saying? Equip her with the skills, but don't wrap her in cotton wool. I hope you take it the right way. The last one is anonymous on email. Hello, Monica. Greetings of the day. I am from Bangalore. First, I would like to thank you for making us financially aware. I've been an ardent follower of your podcast since reading your book, Let's Talk Money, and have taken many cues from them to improve our financial situation. I'm 38 years old. Along with my spouse, we cumulatively earn this much per month. We have adequate term health emergency fund. Basically, by the book, he's done everything. Well done. Since I value your suggestion and strategy, I'm asking. We bought an under construction apartment in Bangalore worth that much, which is due for delivery mid-2028. We have given a booking amount. We've taken a loan. The EMI is this much. Post this and everything, I'm still able to invest a substantial amount. My wife and I have differing opinions. I want to invest this extra amount in mutual funds. She thinks we should reduce the loan amount and close it. My thought process is let it continue building the corpus. If something happens, we can always prepare. What should I do? So, dear anonymous, this is a classic EMI or SIP question. Go loan-free or target a corpus? Look, from a purely mathematical perspective, if your expected mutual fund returns are higher than your loan's interest rate, it makes more sense to invest. A 12% return on your SIP is higher than a guaranteed 8.5% saving on your home loan, isn't it? So, if you're paying it in a half on a home loan, but you're expecting to get 12% return on your SIP, I think the writing is clear what you should do. This is the opportunity cost principle at work. The money you use to prepay the loan is money you can't invest to earn a potentially higher return. In addition, if you're getting a tax break on the home loan, then the decision gets more skewed in favor of not increasing the EMI beyond what you're paying already. So, look, you're both earning. You seem to be in a very strong financial position. You've got all the seat belts on. You're earning well. Your saving potential is very large. Just remember one thing, as you both progress in your careers, the EMI burden will get lower and lower compared to your income because EMI is a flat amount. Your income will continue to grow. So, as a percentage, five years down, it's a much smaller number than it is today. So, in your case, only in your case, okay, I'm comfortable in keeping the home loan EMI where it is and I would push for a larger SIP allocation. To the other listeners, remember, this is a solution which works for this family because I've looked at their finances, I've looked at what their saving potential is, but it might not be good for others. Remember, personal finance is personal. There is no one size that fits all. And that's a wrap for today. I enjoy answering your money questions. Remember, I don't look at individual portfolios. I don't recommend products. Look upon the space as a place to ask strategy questions, doubts, and just basic things that you might not understand. Each time you have a good money outcome, I feel that I have won. To make sure that you don't miss an episode, press follow and help your friends get money smart by sharing a link with them. You can reach out to me at mailme at the rate monikahalan.com. That's Monica with a K. Tag my social media handles at the rate monikahalan. And finally, remember that you should have money and money should not have you. So let's talk money again soon. Bye