Portfolio Scenario 1 Example of Savings

Let us calculate the retirement and financial planning with few simple assumptions:

• Salary hike is expected to growth at 10 percent per annum year on year.
• The cost of living is likely to go up at inflation rate i.e. by 8% year after year.
• Mr. Trader is currently 30 years of age and Mr. Trader map to retire at the age of 50. Which conclude only 20 years for retirement planner.
• You don’t have it in mind for occupation after you retire and your expenses are fixed and don’t forecast any other expenditure.

Going by these assumptions, here is how the cash balance will look like in 20 years as per Table

Years	Salary Income p.a.	Expenses Y-o-Y	Net Cash Savings
1	7,80,000	6,60,000	1,20,000
2	8,58,000	7,12,800	1,45,200
3	9,43,800	7,69,824	1,73,976
4	10,38,180	8,31,410	2,06,770
5	11,41,998	8,97,923	2,44,075
6	12,56,198	9,69,757	2,86,441
7	13,81,818	10,47,337	3,34,481
8	15,19,999	11,31,124	3,88,875
9	16,71,999	12,21,614	4,50,385
10	18,39,199	13,19,343	5,19,856
11	20,23,119	14,24,890	5,98,229
12	22,25,431	15,38,882	6,86,549
13	24,47,974	16,61,992	7,85,982
14	26,92,772	17,94,952	8,97,820
15	29,62,049	19,38,548	10,23,501
16	32,58,254	20,93,632	11,64,622
17	35,84,079	22,61,122	13,22,957
18	39,42,487	24,42,012	15,00,475
19	43,36,736	26,37,373	16,99,363
20	47,70,409	28,48,363	19,22,046
Net Cash Balance at Retirement Age:	1,44,71,603

Above calculation results are quite shocking:

• After 20 years you have accumulated around Rs.1,44,71,603/- (approx. around $2,22,640).
• Considering your expenses are same after retirement and expenses will continue to grow at 8%. It’s an adequate amount to keep you alive for about 4 years post retirement life but after 4 year onwards you will be into financial crisis. How would you manage year on year after 4 year? Is there any way to make better investment plans good enough for post retirement?