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Retirement Planning

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Why Save for Retirement?

Many times the pension schemes like EPF andPPF will not be sufficient to continue yoursame lifestyle afteryour retirement.

Most people do NOT have EPF/PPF cover.

Only 10% of the workforce in India has access

to EPF. 90% of the working people do nothave any organised pension plan.

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HowMuch Regular Income to Plan forAfter Retirement?

According to experts, people require 70% to80% of last drawn salary to live comfortably

after retirement.

When you retire some costs

may go down

But other costs will go up

Loans may be paid off

Higher cost for medical insurance

& health care

No expenses for raising a family

Filling your increased leisure

hours with enjoyable activities may

cost more

Lesser Income Tax

Higher cost of living due to

inflation

No work related expenses Social work

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RISING COSTS: ARE WE READY FOR THIS?

We have to prepare for Rising MedicalExpenses. Over the next two decades, medical

expenses are likely to grow manifold, putting

excess pressure on your savings. Are the

savings enough to take care of rising medical

expenses?Hospitalisation Expenses in case

of some common old age

Illnesses Cost in 2002 (Rs) Estimated Cost in 2023*Heart Attack 150,000 398,000

Joint Replacement 200,000 530,000

Kidney/Organ Transplant 200,000 530,000

Prostrate Surgery 35,000 93,000

Cataract 20,000 53,000

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Retirement a long phase ofyour life

Age 0-20/25(Education)

Age 20/25 55/60(Working)

Age 55/60-90/100

(Retired)

Parentssupport

Support family as well as savefor retirement

Savings for retirementmust last for this non-

income period

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COST OF A VACATION

*Assuming just 5% rise in costs peryear.

Packages

Current cost for two

persons

Estimated cost in year

2023*

14 days USA Tour 3,00,000 8,00,000

12 days Australia Tour 2,60,000 6,90,000

15 days Europe Tour 2,20,000 5,85,0003-days Dubai Package 92,000 2,45,000

3 days Singapore Tour 60,000 1,60,000

14 days North India Tour 42,000 1,11,500

10 days South India Tour 25,000 66,000

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How Long Will We Live?

Life Expectancyhas increased continuously over thelast century because of improvement andadvancement in medical facilities.

Males & females in India at age 60 today areexpected to live, on an average, beyond 75 years ofage.

Therefore, we will need to have adequate resources tosupport you & your spouse for at least 20 years afterretirement.

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When Should One Start Saving For Retirement?

Start Saving now. Since returns accumulate overtime,time is money!

Let us take 2 examples:

Mr. Lakhotia saved Rs 10,000 everyyear from age 25 to

60. Total Investment = Rs 3,60,000Mr. Sharma saved Rs 10,000 everyyear from age 35 to 60.

Total Investment = Rs 2,60,000

Let us assume that both get returns of 8% per annumon their investments.

Mr. Lakotia receives Rs. 18.71 lakhs at age 60.

Mr. Sharma receives only Rs. 8 lakhs at age 60.

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By investing only 38% more, Mr. Lakhotiaaccumulated 133% more than Mr. Sharma at

age 60. That is the benefit of starting early.

Accumulation of Savings

0

200000

400000

600000

800000

1000000

1200000

1400000

1600000

1800000

2000000

1 2 3 4 5 6 7 8 910

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

29

30

31

32

33

34

35

36

Years

Rupees

Mr. Lakhotia Mr. Sharma

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Indicative savings required today to earn a steady post retirement income.

Assumptions:

Savings will grow at 8%.

Annuity Rates are 6% at the time of retirement.

Target Income per Month after

retirement for 20 years

Capital Required to

generate that

income Years to retirement

Annual Savings

Required10 years 90,807

20 years 28,746

30 years 11,612

10 years 136,211

20 years 43,119

30 years 17,419

10 years 181,615

20 years 57,49330 years 23,225

10 years 454,037

20 years 143,731

30 years 58,062

10000 1420725

15000 2131088

20000 2841450

50000 7103625

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ThankY

ou