How Much Money Do You Need To Retire Early?

for the next 50 years you have enough money to take care of yourself right can you shed some Moonlight on the expensive side what is your current expenses from a planning perspective I have kept it at 15 lakhs per annum last point in time I would have been saving almost 90 92 percent of my salary I mean you can choose not to answer it but then would you want to tell us what was the last salary you ended up making before retirement yeah okay I'll not give an exact number because then I get hooked on to it but just to give you a sense if I wanted in a in a year I could have uh 12 maruti Shia standing here one for each month if I wanted to spend that entire income of mine how did you end up planning that amount this is the money which I want and after that I am good to go yeah and anything this is an important thing which a lot of people don't get it because as I said I quit around two months back since then I've got so many friends and people who've called me to ask what is the right amount and actually a lot of people don't know so I created an Excel file which will first of all assets okay I've broken into physical assets like I had three four houses what is a house and what is a realistic market rate of that today so after physical assets was next item in terms of uh non-physical assets so which included mutual funds shares and then what is in my bank fds what is in my savings bank so then that Excel file listed all of that down and there is value as of that given date okay right after that I had liabilities which are listed down so this is all the money that I have versus minus what I have to give away okay so what my loans would be right be it mortgages be it my car loan it could be even my credit card outstanding on that date okay so I'll add all of that up from that net worth I would minus the house that I'm living in as a asset because I would aware right so if you look at my Excel file it shows my expense is one like one lakh one lakh but every month seven percent divided by 12 how the inflation hits me it's not once in a year it's a continuous thing that hits you so on that file goes down tell the age that I am 100 which is November of 2072. okay okay that's one part of the file right assuming the other is what is my net worth today and I have assumed I only get eight percent return one person more than what what a inflation is okay and then I say okay uh you know this is what I will be spending every month what is my balance after that month's expense so I saw till 2072 I am covered now what additionally I have done in that Excel file I know when will my son go to college I have added a factor of 10 lakhs in the month of July of 2023 then July of 24 again 10 lakh so I was even 40 lakhs I've kept aside month and that 10 is not 10 okay I have factored in inflation okay now one is my living expenses monthly expenses that I'm counting inflation at seven percent education I have factored in annual 10 percent inflation okay similarly what I've also done is every year in April I'm assuming there is a medical expense right and I have factored medical expense will continue in traded 15 percent so besides the fact that I have health insurance I have kept that as an additional expense right I have also factored in vacations okay I would want to travel the world now so I've kept a number that a vacation again I have kept it at 10 inflation assuming you know if flights become costly hotels become costly and then I have kept a 10 margin on overall itself if I were to go back and look at my calculations I I could have quit two years back but it's not easy to call it quits yeah and I was clear if I could I don't want to come back to corporate life again right so for those two years I continue to test my hypothesis my calculations and Excel file which runs into hundreds of lines rare circumstances also factored in beyond that then I said it doesn't make sense to continue to earn money when did it occur to you that you would want to retire as early as 50. now the reason why I'm saying as early as 50 is because in India most of people end up working Beyond 60 also yeah that is either by force because they want money or by choice so so we rarely meet people who end up retiring so early right so when did you start planning for it by the way JB Morgan last year in India has increased retirementation of 65. if you wait till your retirement then you may have the money to go to Switzerland but then you will be sitting in a hotel and just looking outside of the window but if you want to really enjoy go out and you know be able to live the life you need to have time for that right so either age is on your side or money is on your side so you need to create that balance okay so that's when I started reading researching spent a lot of time over the last five seven years and that's what is related to this today where I think I am at the right stage where I am not too old not to enjoy but the same time I have ensured that I have a Financial Security till the age of 9200 for me and my family while retirement age may be 60 or 65 I would I personally consider the Practical retirement age is 50. how many companies would want to have a top heavy organization top heavy in terms of age right there is so many people who have more energy ideas enthusiasm and who will want to push and move up in life around 10 years back is when you started planning for it very aggressively when did you buy your first house so my first house I bought in 2002 2002 in Pune right and then I bought one in NCR because I was from Delhi okay I bought one when I moved to Hyderabad okay and I bought one when I moved to Bangalore and it was like you know I have a house in every city where I have worked but again thanks to Excel and working through that I realized financially I had lost money in almost all of them except one so one by one I started disposing them off you said that you ended up losing a lot of money when you invested in house right but why do you say so that you have lost a lot of money the only one I've kept is is the house in Bangalore because I decided to settle and I can give you a real example of the one that I bought in NCR I bought for around uh 50 lakhs and I sold after 10 years for around 65 lakhs so there is like you can imagine right even a FD would have given better returns right so I lost money that way the other way and for all my properties what I've done is the day that I bought that house assuming I would have bought cash down right uh what was the sensex on that day I went and Googled on BSC website and you will get it so I use that as a base to say instead of buying a house worth 60 lakhs or one crore if I would have invested in this market and I index in the uh since X if a 50 thing got sold for 65 I would have in the same time made 1.5 if I would have bought an index and property always appreciates in a lump so suddenly you will find two years and suddenly profitable double and people will say yes that is the best investment but not realizing that five years maybe property will not move any other property rates will stay flat or stagnant so that's one thing the other thing I've realized in a huge amount that has helped me retire early also is the fact that if I have a house worth one crore it has become one and a half crores great I need 15 lakhs for my child's education can I sell one bedroom out of the three and say I got my 50 lakhs no right I wanted tomorrow can I get the best price if I suddenly go to the market and say I want the money tomorrow no so what I realized was a the market is giving better returns you have flexibility with you you have liquidity with you there is nothing that goes except for the emotional fact that I own a house okay that's the only thing and and therefore that's when I started doing these mathematics I realized uh I may have lost a lot of money but I have not still lost an opportunity to recover that so that's when I started exiting and reinvesting a lot through uh the market and I think that has helped me retire sooner so I mean you said that you had four houses you slowly got all of them sold and then you ended up settling in Bangalore right but then just before retirement you ended up investing good chunk of money on this beautiful Farmhouse what was that logic behind it if you can help us understand once I decided that I want to retire I want to quit I wanted a mix of City Life and life on you know this is not even a tier two this is actually a village that this is uh this Farmhouse is in but it is one and a half hours or maybe Max two hours from my house the way I look at it the quality of life I'll get here is impressive uh it'll keep me busy as we spoke about having some purpose and hobby I think growing my own fruits and vegetables will be a point of joy and that's what I'm looking forward to doing now that started developing this land if I were to and I can't take my financial hat off so from investment point of view look at it for that this land I bought around two and a half for years back has appreciated by 75 percent not that I'm going to sell it therefore it doesn't matter but if then emergency so arises or a need so arises or else for whatever reason I need to move out of the city I know there is a financial asset that I have built if you could throw some light on what was your asset allocation post liquidation of real estate so real estate now is down to around 15 per 18 percent including if I add this Farmhouse as well the balance that I have in today that I have I would say in fact to be very precise sixty percent is inequity 40 in debt so Summit you have retired right what I want to know is how much money should I accumulate before I retire oh okay um it's a it's a very personal thing and I'll give you a couple of anecdotes first of all uh a couple of friends that I want to talk about one uh who reached out to me who takes two International vacations a year okay and international vacation does not mean Asia for him because he thinks uh going to Hong Kong or Singapore is like a domestic trip for him he considers have to cover a European city or American and the latest he wants to go to Machu Picchu in South America and he doesn't have even I would say 10 what he needs to retire if he wants to continue with this existing lifeline and I'm talking my friends or their same age group of 50 51 types okay the other end uh you know off late just because I quit a couple of months back her friend after knowing that reached out to me and he's a very senior person in a multinational bank and uh he said samith now that you are in this field can I take advice and I said tell me and he was like I have um around 18 crores of my savings 18 crew one eight and I have four houses in couple of cities and I don't know if I'm ready to retire and he has only one child I was like boss you have much more much much more than uh what you need and I'm not even counting the fact that he is the only son of his father so his father will leave his own legacy foreign obnoxious and all of that stuff how much do I need to retire and that's a question that you're also asking right I don't think uh people know that and therefore either they are in a Fool's Paradise and they don't save enough or else they're The Other Extreme that they have overdone it maybe sacrifice some happiness and so and forgot that YOLO thing and therefore they are now at a stage where they still not sure if they can retire but here is what I will tell you uh there is not a single number uh because if I give a number people live in Anchor buyers they'll get hooked on to that number I have made X crores and therefore I am ready or I need to make x square one based on your lifestyle based on where you are living based on what are the other factors in your family do you have to take care of a joint family are you staying alone do you have a kid it's a very personal thing giving one number would be a big mistake but I can tell you it can range from anything between you know somebody can even survive it two and a half three crores okay two there is no upper limit but it's a very personal thing but I have as I told you some of the elements that will go into it is your lifestyle your running monthly experiences your expected future expenses any planned and unplanned things um and where you want to retire in your tier 2 City obviously cost of living will be much cheaper and lesser so you have to factor all of that in and then come to a number I understood when you were earning money your your Viewpoint or or the way you looked at money would have been very different basically what it is now how that has changed if you ask me today submit do you want to buy a BMW or a Merc I can go and cash down by today but today I don't think I need that mother the day I need it I'll go and buy it and nobody's stopping me and I think I can still manage my finances but my relationship now is very practical with money I'm enjoying the same thing with my Innova right why will I want to it's it's okay I'm not saying people are wrong to buy an Audi or a Merc or a BMW to each on their own I would rather spend a crore on this Farmhouse rather than a coron buying a car and everyone has to be happy so that relationship is you need to be happy but at the same time remember your income is not permanent but your expenses are permanent and that only rings in my mind right and the better balance you create you see I want you to enjoy life as well and what else are you earning for right but at the same time remember there will come a day when you will stop earning and will live 50 years 40 years after that that is something you can't forget so create that keep that long term and your immediate Joy and create that balance understood [Music]

Channel: Wint Wealth

Views: 761,276

Keywords: early retirement, money, rich

Id: _BhZqJdsaXU

Length: 14min 10sec (850 seconds)

Published: Sun Jul 23 2023