Retirement planning might seem daunting if you are 40, but it's far from impossible. With India's growing economy and the power of compounding, you can still build a substantial corpus of Rs 5–6 crore by age 60.
Yes, starting at 40 means the "magic of compounding" has a slightly shorter wand, but it's still incredibly powerful. Many salaried Indians in their 40s juggle EMIs, kids' education, and ageing parents, yet still build a Rs 5–6 crore corpus by 60.
One of the most popular ways for achieving such a goal is to invest in a monthly Systematic Investment Plan (SIP). Here are some calculations which show how much you would need to invest to achieve a corpus of Rs 5–6 crore by retirement if you start investing at 40.
Investing Rs 55,000/month in mutual fund SIPs:
Monthly investment: Rs 55,000
Tenure: 20 years
Total investment: Rs 1.32 crore
Expected rate of returns: 12%
Estimated returns: Rs 3.74 crore
Maturity corpus: Rs 5.06 crore
Investing Rs 65,000/month in mutual fund SIPs:
Monthly investment: Rs 65,000
Tenure: 20 years
Total investment: Rs 1.56 crore
Expected rate of returns: 12%
Estimated returns: Rs 4.42 crore
Maturity corpus: Rs 5.98 crore
Most 40-year-olds see their income peak in the next decade. If you can't start with an investment of Rs 55,000-60,000 today, you can instead start with Rs 40,000 and increase your SIP by 10% every year. This "step-up" makes reaching your goal significantly easier.
To financially prepare for retirement, it is also important to prioritise paying off credit card debt or personal loans. The interest rate you would have to pay on such debt will harm the power of compounding.
To conclude, starting at 40 gives you 20 prime earning years to accumulate Rs 5–6 crore. The formula is simple: save aggressively, invest wisely and let compounding work to achieve the target.
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