Step 2: Determine your post-retirement expenses
If you haven't provided yourself with enough money at the time of retirement, it is bound to impact your post-retirement lifestyle. So it's important that you make an accurate estimate of how much amount you will require, to maintain your present lifestyle after you retire.
For this, first ascertain your annual expenses at present. Then factor in inflation to calculate how much your present expenses will amount then i.e. at the time of retirement.
This is the amount you will need every year to meet your post-retirement expenses.
Assume that your present annual expenses amount to Rs 120,000. If you have 25 years to retire and expect the rate of inflation to be around 7% per annum; then after adjusting for inflation, your annual expense then will be approximately Rs 651,290.
Image: Invest wisely! Stock traders are reflected on the glass partition of a dealing room at brokerage firm Motilal Oswal Securities. | Photograph: Indranil Mukherjee/AFP/Getty Images
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