I'm 34, married, and wish to retire by 45. What should be my target corpus?

I am 34 years old, married, and wish to retire by 45. What should be my target corpus? I request your help with my retirement planning. I have ₹84 lakh in mutual funds, an emergency fund of ₹2.5 lakh in an FD, and sufficient health and term insurance. How should I plan?

Reply by Mayank Bhatnagar, Co-Founder and COO, FinEdge

Early retirement requires serious mathematical calculations, and the information you have provided is insufficient.

To calculate accurately, you need to evaluate your current monthly expenses and factor in inflation for your retirement period. Retiring at the age of 45 means you would need to cover another 40 years of retirement expenses (until age 85). Your retirement corpus would need to be large enough to sustain 480 months of expenses without compromising your lifestyle. This requires a significant corpus, and the exact amount can only be calculated once additional information is available. For example, if your inflation-adjusted monthly expenses are ₹2 lakh (assuming ₹1 lakh per month today), you would need approximately ₹10 crore as your retirement corpus to start with!

To embark on a comfortable retirement journey, keep the following in mind:

1. Have a retirement plan prepared by an expert, fully disclosing your financial information and considering your unique requirements.
2. Calculate inflation-adjusted post-retirement expenses to maintain your current lifestyle.
3. Estimate a retirement corpus that will last for your entire post-retirement period.
4. Accelerate your investments if there is a shortfall in your projected retirement corpus.
5. Engage an investment expert to create a personalized retirement plan. An expert not only designs a plan but also helps you stay on track with regular portfolio monitoring and ensures that your investing behavior is in check – both critical for investing success.

FIRE (Financial Independence Retire Early) sounds easier than it actually is and requires a detailed financial plan and expert guidance. Avoid making decisions based on ad-hoc calculations, as they can lead to tough situations due to incorrect assumptions.