The Magic Figure for Middle Class

magic figure

I went to multiple sites to find that magic figure which would work for my retirement. Found many formulas and many calculators. It’s too confusing. I do not want to confuse you further. Let’s try to keep it simple here.

Well on the day of writing this blog I am 32 married without a kid and the year is 2020. Minus all my loans, expenses per month are around 20,000-50,000. Firstly I am not asking you to live cheap.

The first question you may ask why such a big range. Let me try to answer that first.

20K is more than enough for the month I am eating fully at home.

Food may come to about 5k for a month. [includes full grocery including non-veg, fruits and nuts]
Personal expenses around another 5k. [Soap, paste to that shaving set, mobile recharges, TV, internet]
Fuel expenses at around 3k.
Add another 7k for buffer and minor emergencies to make it 20k.
Don’t try to add any RD or SIP here as you don’t need them after retirement.

Now suppose some sudden expenses like getting a new phone, repairing that washing machine or TV, car servicing, insurance renewal etc., this should come in that in 50k limit.

Well yes, 20k is more than enough for a comfortable living. The excess cost will surely be covered under this 50k upper limit. Only thing I assume here is you have your own home. Rest cost of living doesn’t differ much based on cities. It will be almost +/- 5k range.

So 28 years later this expense will be in the range of around 1lakh to 2.5 lakh per month. The 20k grows to 1lakh and 50k grows to 2.5lakh. This is based on the rate of inflation calculated at 6% p.a.

The lower limit of this 1lakh minimum is unavoidable, you have to bear it. Well, you need to afford upper limit also I didn’t consider a lavish lifestyle during calculation above. I made this calculation for a middle-class family in India.

This 1-2.5 lakh has to be generated from your savings. So to achieve this, you need at least 3-6 Crore at your 60 age. 3crore is for your lower limit to get that 1lakh per month and 6 Crore for the upper limit to get that 2.5 lakh per month. Let’s try in the coming days to plan how to achieve that magic figure.

Ahh, I want to say once again that the above calculation is for that middle class who can’t afford much travel and site seeing etc every month. Well to put it in a better way you’ll be able to continue doing as much spending and travelling as you were doing till now with 50k every month.

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