As ansettled in the Gulf or elsewhere, you might be contemplating returning to your homeland after . involves a thorough process which is common to all. However, when you are earning in a foreign land and ultimately settling in India, there are some additional factors to consider.
First of all, decide at what age you want to retire. Usually, ex-pats in the private sector in UAE can work only till 65 years. It is relatively lower at 60 years for those working in Saudi Arabia, Kuwait and Oman. However, yourage need not necessarily be limited to such foreign laws as you can continue to work in India after quitting work abroad.
There is an unspoken rule inplanning – you spend two-thirds of your life in the accumulation phase – saving for and a third in drawdown. With increased life expectancy, you should also plan to work for longer years.
Target nest egg
Once you arrive at yourage, calculate the target corpus. Since you are going to retire in India, it should be set in rupee terms.
Where do you plan to retire? Cost of living in metropolitan Indian cities is going to be higher than that of Tier-two cities. Moreover, you might not want to compromise on your lifestyle that you got used to in the foreign land. Accordingly, figure out a household monthly expenditure that you would be comfortable with. One should, however, exclude any house EMI or contribution towards other financial goals like child education from the above monthly expenses.
Assume that a monthly household expenditure of Rs 50,000 (or Rs 6 lakh annually) in India at current prices ensures a decent lifestyle for you. After 30 years, such expenses will rise to Rs 2.9 lakh a month (about Rs 35 lakh a year) with annual inflation of 6 per cent.
One rule of thumb suggests building anest of at least 25x (times) the annual expenses at the time of . The idea is that you build a kitty large enough to generate income at least equivalent to that of your expenses (then). In this example, a nest of Rs 8.6 crore (Rs 35 lakh*25) at the end of 30 years is expected to yield at least Rs 2.9 lakh every month at 4% per annum.
Once you know the targetcorpus, take stock of your current financial in the form of , stocks, bank FDs in India as well as abroad. Include any additional house you own (besides the one you stay in) in it.
It will give you an inkling of where you stand financially at this juncture and the amount of monthly savings you need to do to achieve the target. Assuming you have no existing, a of Rs 24,000 – that increases by 5 per cent every year – will get you to the targeted nest of Rs 8.6 crore in 30 years.
This is assuming you are60% in equities and rest in debt that effectively yields 10 per cent annually. If you are 100% in equities, you can do so with a lesser amount (Rs 16,500) assuming an of 12%.
So, if you are earning 20,000 dirhams (AED) annually in Dubai, your income works out to Rs 4 lakh a month in rupees. In the above case, saving 5% of your monthly salary andin Indian can help you achieve the target. more than that can, of course, accelerates your progress towards goals. Moreover, you also need to calibrate your based on currency price fluctuations and ensure you at least the targeted monthly rupee amount at all times.
Since you are retiring in India and would be spending in rupees, you need to predominantlyin Indian for achieving your goals.
Before coming back to India, gradually start liquidating all your foreign– especially physical like that of real estate. A Last-minute sell-off would otherwise prove counterproductive.
Similarly, liquidateproducts like 401K (of US) after considering its lock-in period and cost implications. For instance, there is a huge penalty for withdrawing 401K funds before you are 60 years old.
Last but not the least, ensure you channelize these calculator to figure out how much you will need based on your current income and expenses.back home into equities in a systematic way. Use this