# Re: [silk] To retire or not - that is the Q.

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>
>
> Hypothetically, say that translates into 25K + 5K + 5K + 5K= 40K per month.
> Need to have a corpus that gives you this monthly amount with even
> conservative investments such as FDs. We're talking about a 8-10% ROI per
> annum. So, in this example, you need to have a corpus of 50 - 55 lakhs. If
> you have a good financial planner and a higher risk appetite, your returns
> can be higher. Hope this helps.
>
>
You will need a lot more. So I have this post: how much FY money do you
need?
http://capitalmind.in/2014/09/how-much-is-enough-to-say-fy/```
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and then I have this thingy:
http://capitalmind.in/2016/08/saving-retirement-much-enough/

What you need is a lot more because
a) inflation is much bigger than 5K
b) you need to plan to live to age 90. Just because.

Now I assume you're the only person in your household with revenue, so you
may have to plan cash flow for say 50 years.

You need money that gets you this 8% return and yet, lasts you all the way
for 50 years. How much do you need?

The Answer is about Rs. 1.22 crores. (Assumptions: you get 8% on your
money, you spend 40K a month now, inflation is 5% a year).

The way it works is

Year 1 you have 1.22 cr. on which you make, at 8%, about 9.75 lakh, or
which you spend 4.8 lakh, and the rest stays in your capital which goes up
to 1.27 cr.
Year 2 you have 1.27 cr. on which you make, 10.16 lakh, you spend 5.04 lakh
(remember, 6% inflation) and your capital goes up to 1.32 cr
and so on

your capital keeps going up for 35 years, till you have about 3.2 cr. and
in the last 15 years, it will plummet to zero (in the 50th year from now)
This capital also acts as an emergency buffer.

I know there are variables, so you can calculate different ways to get
there - perhaps you sell your house when your daughter's 18 and then move
to a smaller place. Maybe you reverse mortgage the house when you're 60 to
get some money from a bank. Etc. I had a calculator on how much you need,
it's at http://capitalmind.in/2006/10/how-much-do-you-need-in-order-to/.

Now, here's the other thing. If you're planning to build cash flow, don't
use FDs. They create taxable income and at large corpuses become very
unwieldy. THere are other instruments - I can give you more details if you
want to explore. These will both save you tax and perhaps create a "kicker"
income if rates continue to fall (a key risk here - imagine the person who
did this calculation in 1980 in the US - interest rates of 12% - and today
the FD rates are like 0.5%)

Don't worry if you don't have this kind of money right now - there are
not-so-difficult ways to get there if you plan it a little more. You don't
want a precise plan - you need lots of buffers - but you need an idea that
this takes me to age 90. The big thing I would imagine you haven't
considered is that your child will need a lot more money as she grows up
and that you will need a lot more money for travel which I'm thinking is a
good part of your bucket list.
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