Question

Anupam is currently 38 years old and plans to retire when he is 65. He earns Rs25,00,000 a year as a wedding planner and gets a 5% increase every year . He currently has Rs 3,80,000 saved for his retirement in an equity fund that earns 20%. Anupam will leave the money in this mutual fund until he retires, the time when he will place all his savings into a money market mutual fund that earns 6%. He contributes 10% of his income every year into his retirement account. Mr.Anupam expects to require 90% of his income as retirement income for at least 30 years. The expected average rate of inflation is 3.5%. Mr.Anupam is concerned that he might not have enough money to retire when he is 65 years old.

1. How much money Anupam will have saved when he retires at the age of 65?

2. Determine whether Anupam can retire at 60 years of age instead of 65 if he starts saving 15% of his salary?

3. If Anupam wants to retire at 60 years but does not want to save more than 10% of his income, provide some alternatives to meet his retirement needs.