Let's Talk Money: You've Worked Hard for It, Now Make It Work for You

by Monika Halan

The first one uses your current income which I call ‘Save Your Age’. The second one – ‘Multiply Your Spend’ – uses your current expenditure to forecast what you will need in the future and how much you need to have. There are just too many things that change

Save your age At age twenty-five save 25 per cent of your post-tax income, at age thirty save 30 per cent of your post-tax income. At age forty save 40 per cent. This formula works if you don’t have a single rupee saved towards your retirement, till you are forty. For example, if you are forty years old and have not a rupee

Multiply your spend A better way to target a retirement number is to look at your current expenditure each month and each year. An expense multiplier is, in fact, a better way to crack the same problem, because at the same level of income, different families will have very different spending behaviour.