{"id":1342,"date":"2025-01-05T20:49:10","date_gmt":"2025-01-05T20:49:10","guid":{"rendered":"https:\/\/thethinkingplanet.com\/?p=1342"},"modified":"2025-01-05T20:49:14","modified_gmt":"2025-01-05T20:49:14","slug":"retirement-investment-simplified-the-power-of-smart-investments-and-compounding","status":"publish","type":"post","link":"https:\/\/thethinkingplanet.com\/retirement-investment-simplified-the-power-of-smart-investments-and-compounding\/","title":{"rendered":"Retirement Investment Simplified: The Power of Smart Investments and Compounding"},"content":{"rendered":"\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_62 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title \" >Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/thethinkingplanet.com\/retirement-investment-simplified-the-power-of-smart-investments-and-compounding\/#Introduction\" title=\"Introduction \">Introduction <\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/thethinkingplanet.com\/retirement-investment-simplified-the-power-of-smart-investments-and-compounding\/#Definition_of_Retirement_and_Retirement_Investment\" title=\"Definition of Retirement and Retirement Investment\">Definition of Retirement and Retirement Investment<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/thethinkingplanet.com\/retirement-investment-simplified-the-power-of-smart-investments-and-compounding\/#Investment_Plan_for_Retirement\" title=\"Investment Plan for Retirement\">Investment Plan for Retirement<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/thethinkingplanet.com\/retirement-investment-simplified-the-power-of-smart-investments-and-compounding\/#Some_Starting_Assumptions_for_Planning_Retirement_Investments\" title=\"Some Starting Assumptions for Planning Retirement Investments\">Some Starting Assumptions for Planning Retirement Investments<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/thethinkingplanet.com\/retirement-investment-simplified-the-power-of-smart-investments-and-compounding\/#How_Much_Can_We_Invest_for_retirement\" title=\"How Much Can We Invest for retirement?\">How Much Can We Invest for retirement?<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/thethinkingplanet.com\/retirement-investment-simplified-the-power-of-smart-investments-and-compounding\/#How_to_Invest_for_Retirement\" title=\"How to Invest for Retirement\">How to Invest for Retirement<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/thethinkingplanet.com\/retirement-investment-simplified-the-power-of-smart-investments-and-compounding\/#1_Fixed_Return_Assets\" title=\"1. Fixed Return Assets\">1. Fixed Return Assets<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/thethinkingplanet.com\/retirement-investment-simplified-the-power-of-smart-investments-and-compounding\/#2_Large-Cap_Mutual_Funds_for_retirement_Investment\" title=\"2. Large-Cap Mutual Funds for retirement Investment\">2. Large-Cap Mutual Funds for retirement Investment<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/thethinkingplanet.com\/retirement-investment-simplified-the-power-of-smart-investments-and-compounding\/#3_Medium-Cap_Mutual_Funds_as_retirement_investment\" title=\"3. Medium-Cap Mutual Funds as retirement investment\">3. Medium-Cap Mutual Funds as retirement investment<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/thethinkingplanet.com\/retirement-investment-simplified-the-power-of-smart-investments-and-compounding\/#4_Small-Cap_Mutual_Funds_for_retirementinvestment\" title=\"4. Small-Cap Mutual Funds for retirementinvestment\">4. Small-Cap Mutual Funds for retirementinvestment<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/thethinkingplanet.com\/retirement-investment-simplified-the-power-of-smart-investments-and-compounding\/#Projected_Returns\" title=\"Projected Returns\">Projected Returns<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/thethinkingplanet.com\/retirement-investment-simplified-the-power-of-smart-investments-and-compounding\/#Increasing_the_Retirement_Investment_Amount_Over_Time\" title=\"Increasing the Retirement Investment Amount Over Time\">Increasing the Retirement Investment Amount Over Time<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/thethinkingplanet.com\/retirement-investment-simplified-the-power-of-smart-investments-and-compounding\/#What_Will_Be_Our_Expenses_After_Retirement\" title=\"What Will Be Our Expenses After Retirement?\">What Will Be Our Expenses After Retirement?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-14\" href=\"https:\/\/thethinkingplanet.com\/retirement-investment-simplified-the-power-of-smart-investments-and-compounding\/#Investment_Amount_After_Retirement\" title=\"Investment Amount After Retirement\">Investment Amount After Retirement<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-15\" href=\"https:\/\/thethinkingplanet.com\/retirement-investment-simplified-the-power-of-smart-investments-and-compounding\/#Calculations_of_Retirement_Investment\" title=\"Calculations of Retirement Investment\">Calculations of Retirement Investment<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-16\" href=\"https:\/\/thethinkingplanet.com\/retirement-investment-simplified-the-power-of-smart-investments-and-compounding\/#Total_Outcome_of_Retirement_Investment\" title=\"Total Outcome of Retirement Investment\">Total Outcome of Retirement Investment<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-17\" href=\"https:\/\/thethinkingplanet.com\/retirement-investment-simplified-the-power-of-smart-investments-and-compounding\/#Understanding_the_Amount\" title=\"Understanding the Amount\">Understanding the Amount<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-18\" href=\"https:\/\/thethinkingplanet.com\/retirement-investment-simplified-the-power-of-smart-investments-and-compounding\/#Expenses_After_Retirement\" title=\"Expenses After Retirement\">Expenses After Retirement<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-19\" href=\"https:\/\/thethinkingplanet.com\/retirement-investment-simplified-the-power-of-smart-investments-and-compounding\/#Calculation_of_Plan_After_Retirement_to_Invest\" title=\"Calculation of Plan After Retirement to Invest\">Calculation of Plan After Retirement to Invest<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-20\" href=\"https:\/\/thethinkingplanet.com\/retirement-investment-simplified-the-power-of-smart-investments-and-compounding\/#The_Power_of_Compounding_After_Retirement\" title=\"The Power of Compounding After Retirement\">The Power of Compounding After Retirement<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-21\" href=\"https:\/\/thethinkingplanet.com\/retirement-investment-simplified-the-power-of-smart-investments-and-compounding\/#Investment_Growth_Over_Time\" title=\"Investment Growth Over Time\">Investment Growth Over Time<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-22\" href=\"https:\/\/thethinkingplanet.com\/retirement-investment-simplified-the-power-of-smart-investments-and-compounding\/#Financial_Freedom_and_Security\" title=\"Financial Freedom and Security\">Financial Freedom and Security<\/a><\/li><\/ul><\/nav><\/div>\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Introduction\"><\/span><strong>Introduction <\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>A few days ago, I read an article in the newspaper about retirement investments. The most intriguing point mentioned in the article was this: <em>&#8220;Every person should know exactly how much money they are chasing. If you don\u2019t know this, it\u2019s like running a race without knowing where the finish line is or when the race will end.&#8221;<\/em><\/p>\n\n\n\n<p>This situation is quite common when it comes to money. If you ask someone this question, you\u2019ll usually get vague answers. People will talk about millions and billions, but very few have a clear idea of how much is enough and when to stop. Most people spend their entire lives chasing money without ever taking the time to truly enjoy life.<\/p>\n\n\n\n<p>In my opinion, everyone should be aware of their financial goals\u2014how much money they actually need to live the life they want and when they can stop chasing money. There should be a clear point where, through savings and investments, they reach financial independence and can retire. After that, they can start a new phase of life where they no longer work for money. In this new life, you wake up in the morning not thinking about going to the office or working again, but living life for yourself.<\/p>\n\n\n\n<p>In this blog, we will attempt to calculate that number\u2014how much money is enough\u2014and understand how to get there with practical examples. We will discuss where and how to invest and save so that you can retire and begin this new chapter of life.<\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"900\" height=\"500\" src=\"https:\/\/thethinkingplanet.com\/wp-content\/uploads\/2025\/01\/5.2-1.webp\" alt=\"Retirement Investment \" class=\"wp-image-1345\" srcset=\"https:\/\/thethinkingplanet.com\/wp-content\/uploads\/2025\/01\/5.2-1.webp 900w, https:\/\/thethinkingplanet.com\/wp-content\/uploads\/2025\/01\/5.2-1-300x167.webp 300w, https:\/\/thethinkingplanet.com\/wp-content\/uploads\/2025\/01\/5.2-1-768x427.webp 768w, https:\/\/thethinkingplanet.com\/wp-content\/uploads\/2025\/01\/5.2-1-600x333.webp 600w\" sizes=\"(max-width: 900px) 100vw, 900px\" \/><\/figure>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Definition_of_Retirement_and_Retirement_Investment\"><\/span><strong>Definition of Retirement and Retirement Investment<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>The most important thing is to understand what retirement truly means for us\u2014what position, condition, or state we define as retirement. Until the year 2000, retirement typically meant that people would retire from their jobs by the age of 60 and live the rest of their lives enjoying their savings, pensions, or returns from any investments they had made.<\/p>\n\n\n\n<p>but the definition of retirement has evolved over time. Today, retirement essentially means that your investments, savings, or assets generate enough income for you to live comfortably without needing to work for money. It\u2019s about reaching a state where the returns from your financial resources can support you, allowing you to fully enjoy your remaining life.<\/p>\n\n\n\n<p>This doesn\u2019t mean you stop working altogether or disengage from professional activities. Rather, it means you stop working solely for money. If there\u2019s a job or activity that gives you mental happiness or satisfaction, you\u2019ll still choose to do it, but the financial aspect\u2014how much you earn from it or even whether you earn anything at all\u2014will no longer matter to you.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Investment_Plan_for_Retirement\"><\/span><strong>Investment Plan for Retirement<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Let\u2019s start by assuming that we are 25 years old and plan to work for another 25 years, retiring at the age of 50. After that, we want to live the rest of our lives on our own terms, without having to work for money. For the next 35-40 years after retirement, we\u2019ll rely on the returns from the retirement investments and assets we build during our working years. These investments will provide us with more money than our salary, and this is what we\u2019ll call our <em>retirement investment<\/em>. <a href=\"https:\/\/thethinkingplanet.com\/a-short-article-on-5-most-common-money-traps-that-makes-you-poor\/\" class=\"ek-link\">Also Read <\/a><\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\" \/>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Some_Starting_Assumptions_for_Planning_Retirement_Investments\"><\/span><strong>Some Starting Assumptions for Planning Retirement Investments<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p><strong>Existing Savings:<\/strong><br>Let\u2019s assume you have no significant savings, such as gold, shares, or other investments. While this may not be true for everyone, many people start with zero, so we\u2019ll use that as a baseline.<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\" \/>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"How_Much_Can_We_Invest_for_retirement\"><\/span><strong>How Much Can We Invest for <\/strong>retirement<strong>?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>Next, we need to determine how much we can invest every month. Let\u2019s assume we can invest $600 monthly. This number may vary for different individuals. Generally, you should aim to invest 20% of your monthly income or more, depending on what works for you.<\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"900\" height=\"500\" src=\"https:\/\/thethinkingplanet.com\/wp-content\/uploads\/2025\/01\/5.3-1.jpg\" alt=\"Retirement Investment \" class=\"wp-image-1346\" srcset=\"https:\/\/thethinkingplanet.com\/wp-content\/uploads\/2025\/01\/5.3-1.jpg 900w, https:\/\/thethinkingplanet.com\/wp-content\/uploads\/2025\/01\/5.3-1-300x167.jpg 300w, https:\/\/thethinkingplanet.com\/wp-content\/uploads\/2025\/01\/5.3-1-768x427.jpg 768w, https:\/\/thethinkingplanet.com\/wp-content\/uploads\/2025\/01\/5.3-1-600x333.jpg 600w\" sizes=\"(max-width: 900px) 100vw, 900px\" \/><\/figure>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\" \/>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"How_to_Invest_for_Retirement\"><\/span><strong>How to Invest for Retirement<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Now, let\u2019s look at how to allocate the monthly retirement investment and any existing savings for retirement. For simplification, we\u2019ll divide our retirement investments into <strong>four options<\/strong>, although you can customize them based on your preferences.<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\" \/>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"1_Fixed_Return_Assets\"><\/span><strong>1. Fixed Return Assets<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>This category includes Fixed Deposits (FDs), Provident Funds (PFs), Employee Funds (EFs), Corporate Bonds, National Savings Certificates (NSCs), or any other asset that offers assured returns.<\/p>\n\n\n\n<p>These are risk-free investments, but the Return on Investment (ROI) is generally low. Let\u2019s assume a return of <strong>7% annually<\/strong>, with <strong>30% tax<\/strong> deducted.<\/p>\n\n\n\n<p>In my opinion, you should avoid such investments during your earning stage because they usually fail to beat inflation. However, you can consider them post-retirement as they offer stability. That said, if you prefer, you can still include them, as some NSCs or corporate bonds may offer decent returns.<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\" \/>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"2_Large-Cap_Mutual_Funds_for_retirement_Investment\"><\/span><strong>2. Large-Cap Mutual Funds for <\/strong>retirement Investment<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>The next safe and reliable option for retirement investments is large-cap mutual funds, which invest in the top companies of the country. Historically, these have delivered a <strong>minimum of 13% annual returns<\/strong>.<\/p>\n\n\n\n<p>After accounting for <strong>20% long-term capital gains tax<\/strong>, we can allocate <strong>40% of the $600 investment amount<\/strong> to large-cap funds for retirement purposes.<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\" \/>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"3_Medium-Cap_Mutual_Funds_as_retirement_investment\"><\/span><strong>3. Medium-Cap Mutual Funds <\/strong>as retirement investment<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>Allocate <strong>30% of the $600<\/strong> to medium-cap funds, which typically generate <strong>15% annual returns<\/strong>. After deducting a <strong>20% long-term capital gains tax<\/strong>, medium-cap funds offer a good balance between risk and return.<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\" \/>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"4_Small-Cap_Mutual_Funds_for_retirementinvestment\"><\/span><strong>4. Small-Cap Mutual Funds for <\/strong>retirementinvestment<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>The remaining <strong>30% of the $600<\/strong> should go into small-cap funds, which generally offer <strong>18% annual returns<\/strong>. Like the other options, we assume a <strong>20% long-term capital gains tax<\/strong> here as well.<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\" \/>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Projected_Returns\"><\/span><strong>Projected Returns<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Based on these calculations, we\u2019re investing $600 monthly and can expect an average <strong>annual return of 14-15%<\/strong> from our retirement investments. This figure accounts for taxes and is likely to increase over time as the return percentages grow.<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\" \/>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"900\" height=\"500\" src=\"https:\/\/thethinkingplanet.com\/wp-content\/uploads\/2025\/01\/5.4-1.jpg\" alt=\"Retirement Investment \" class=\"wp-image-1347\" srcset=\"https:\/\/thethinkingplanet.com\/wp-content\/uploads\/2025\/01\/5.4-1.jpg 900w, https:\/\/thethinkingplanet.com\/wp-content\/uploads\/2025\/01\/5.4-1-300x167.jpg 300w, https:\/\/thethinkingplanet.com\/wp-content\/uploads\/2025\/01\/5.4-1-768x427.jpg 768w, https:\/\/thethinkingplanet.com\/wp-content\/uploads\/2025\/01\/5.4-1-600x333.jpg 600w\" sizes=\"(max-width: 900px) 100vw, 900px\" \/><\/figure>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Increasing_the_Retirement_Investment_Amount_Over_Time\"><\/span><strong>Increasing the <\/strong>Retirement<strong> Investment Amount Over Time<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Let\u2019s assume your salary increases over time. To align with this, you can increase your investment amount by <strong>5% annually<\/strong>. For example:<\/p>\n\n\n\n<ul>\n<li>In 2025, you invest $600.<\/li>\n\n\n\n<li>In 2026, you invest $630.<\/li>\n<\/ul>\n\n\n\n<p>&nbsp;this adjustment is entirely up to you\u2014you can choose to increase your retirement investment by 0%, 10%, or whatever percentage feels suitable for you and your financial goals.<\/p>\n\n\n\n<p>By following this disciplined approach and gradually increasing your investments, you\u2019ll be well-prepared to achieve your retirement goals.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_Will_Be_Our_Expenses_After_Retirement\"><\/span><strong>What Will Be Our Expenses After Retirement?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Now, let\u2019s look at how much we will need every month after retirement. Let\u2019s assume that currently, our monthly expenses are <strong>$2,350<\/strong>, and we will need at least this amount every month after retirement. However, this amount will increase annually with <strong>6% inflation<\/strong>.<\/p>\n\n\n\n<p>Since we\u2019re talking about the future, it\u2019s obvious that unforeseen circumstances may arise. To account for this, we\u2019ll also calculate an additional buffer for future expenses separately.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Investment_Amount_After_Retirement\"><\/span><strong>Investment Amount After Retirement<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>The investment strategy we followed during our earning period will change after retirement. Once we reach the age of 50, we will no longer want to work and won\u2019t be able to afford high-risk investments.<\/p>\n\n\n\n<p>After retirement, we will allocate <strong>40% of the investment amount to fixed return assets<\/strong>, <strong>40% to large-cap mutual funds<\/strong>, and <strong>20% to medium-cap mutual funds<\/strong>. This adjusted strategy balances stability with moderate growth, ensuring a steady income while minimizing risk.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Calculations_of_Retirement_Investment\"><\/span><strong>Calculations of Retirement Investment<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Total_Outcome_of_Retirement_Investment\"><\/span><strong>Total Outcome of Retirement Investment<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>As per our plan, we will invest <strong>$7,200 annually<\/strong> across different investment zones. Additionally, we will increase this amount by <strong>5% every year<\/strong> to account for salary growth. With an average annual return of <strong>14.7%<\/strong>, you\u2019ll be surprised to know that your total investment value will exceed <strong>$2,464,350<\/strong> after 25 years!<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Understanding_the_Amount\"><\/span><strong>Understanding the Amount<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>While this amount may sound very large today, it\u2019s important to consider that in 25 years, the world will have changed significantly. Inflation and rising expenses will also impact the value of money.<\/p>\n\n\n\n<p>So now, let\u2019s analyze whether this amount will be sufficient to sustain our lifestyle after retirement or not.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Expenses_After_Retirement\"><\/span><strong>Expenses After Retirement<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>As we assumed earlier, our current monthly expenses are <strong>$2,350<\/strong>, but with an annual <strong>6% inflation rate<\/strong>, these expenses will increase significantly over the next 25 years.<\/p>\n\n\n\n<p>After retirement, by the time we turn 50:<\/p>\n\n\n\n<ul>\n<li>Our monthly expenses will grow to approximately <strong>$9,400<\/strong>.<\/li>\n\n\n\n<li>This means our yearly expenses will amount to <strong>$112,400<\/strong>.<\/li>\n<\/ul>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"900\" height=\"500\" src=\"https:\/\/thethinkingplanet.com\/wp-content\/uploads\/2025\/01\/4.4-1-1.jpg\" alt=\"Retirement Investment \" class=\"wp-image-1348\" srcset=\"https:\/\/thethinkingplanet.com\/wp-content\/uploads\/2025\/01\/4.4-1-1.jpg 900w, https:\/\/thethinkingplanet.com\/wp-content\/uploads\/2025\/01\/4.4-1-1-300x167.jpg 300w, https:\/\/thethinkingplanet.com\/wp-content\/uploads\/2025\/01\/4.4-1-1-768x427.jpg 768w, https:\/\/thethinkingplanet.com\/wp-content\/uploads\/2025\/01\/4.4-1-1-600x333.jpg 600w\" sizes=\"(max-width: 900px) 100vw, 900px\" \/><\/figure>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Calculation_of_Plan_After_Retirement_to_Invest\"><\/span><strong>Calculation of Plan After Retirement to Invest<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>As planned earlier, the total amount from our retirement investment will be <strong>$2,464,350<\/strong>. From this, we will subtract one year\u2019s expenses of <strong>$112,400<\/strong>, leaving us with <strong>$2,351,950<\/strong>.<\/p>\n\n\n\n<p>We will then invest this remaining amount in the <strong>40:40:20 ratio<\/strong> as planned:<\/p>\n\n\n\n<ul>\n<li><strong>40% in fixed return assets<\/strong><\/li>\n\n\n\n<li><strong>40% in large-cap mutual funds<\/strong><\/li>\n\n\n\n<li><strong>20% in medium-cap mutual funds<\/strong><\/li>\n<\/ul>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\" \/>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"The_Power_of_Compounding_After_Retirement\"><\/span><strong>The Power of Compounding After Retirement<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Here\u2019s where things get interesting! Despite withdrawing <strong>$112,400<\/strong> annually for your expenses, your total investment amount will not decrease. In fact, it will continue to <strong>grow every year<\/strong> due to the power of compounding.<\/p>\n\n\n\n<p>This happens because we\u2019re reinvesting the rest of the money, which grows at an average annual post-tax return of <strong>11%<\/strong>.<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\" \/>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Investment_Growth_Over_Time\"><\/span><strong>Investment Growth Over Time<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ul>\n<li>By the time you reach <strong>76 years of age<\/strong>, your investments will still be generating returns after covering your yearly expenses. At this point, your total investment amount will have grown to approximately <strong>$4.5 million<\/strong>.<\/li>\n\n\n\n<li>However, after this age, your investment value may slowly start to decline as the returns from your investments, inflation, and taxes will likely reach an equivalent balance.<\/li>\n<\/ul>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\" \/>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Financial_Freedom_and_Security\"><\/span><strong>Financial Freedom and Security<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Even after this point, you will still have enough money to live comfortably and pursue whatever you wish. Your investments will have served their purpose, ensuring a financially secure and independent retirement.<\/p>\n\n\n\n<div class=\"wp-block-buttons is-content-justification-space-between is-layout-flex wp-container-core-buttons-is-layout-1 wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link has-text-align-center wp-element-button\" href=\"https:\/\/thethinkingplanet.com\/why-gen-z-will-have-zero-money-case-study-of-india\/\">Also Read  Why GEN-Z will have Zero Money \u201ccase study of India\u201d<\/a><\/div>\n<\/div>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\" \/>\n\n\n\n<div class=\"wp-block-media-text is-stacked-on-mobile\"><figure class=\"wp-block-media-text__media\"><img loading=\"lazy\" decoding=\"async\" width=\"368\" height=\"427\" src=\"https:\/\/thethinkingplanet.com\/wp-content\/uploads\/2025\/01\/me-01_enhanced-2-1_processed-2.jpg\" alt=\"\" class=\"wp-image-1343 size-full\" srcset=\"https:\/\/thethinkingplanet.com\/wp-content\/uploads\/2025\/01\/me-01_enhanced-2-1_processed-2.jpg 368w, https:\/\/thethinkingplanet.com\/wp-content\/uploads\/2025\/01\/me-01_enhanced-2-1_processed-2-259x300.jpg 259w\" sizes=\"(max-width: 368px) 100vw, 368px\" \/><\/figure><div class=\"wp-block-media-text__content\">\n<p><strong>Hope you found this blog insightful! Please share your thoughts in the comments below!<\/strong><br>By Writer <\/p>\n<\/div><\/div>\n","protected":false},"excerpt":{"rendered":"<p>Introduction A few days ago, I read an article in the newspaper about retirement investments. The most intriguing point mentioned [&hellip;]<\/p>\n","protected":false},"author":5,"featured_media":1344,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_editorskit_title_hidden":false,"_editorskit_reading_time":0,"_editorskit_is_block_options_detached":false,"_editorskit_block_options_position":"{}","_EventAllDay":false,"_EventTimezone":"","_EventStartDate":"","_EventEndDate":"","_EventStartDateUTC":"","_EventEndDateUTC":"","_EventShowMap":false,"_EventShowMapLink":false,"_EventURL":"","_EventCost":"","_EventCostDescription":"","_EventCurrencySymbol":"","_EventCurrencyCode":"","_EventCurrencyPosition":"","_EventDateTimeSeparator":"","_EventTimeRangeSeparator":"","_EventOrganizerID":[],"_EventVenueID":[],"_OrganizerEmail":"","_OrganizerPhone":"","_OrganizerWebsite":"","_VenueAddress":"","_VenueCity":"","_VenueCountry":"","_VenueProvince":"","_VenueState":"","_VenueZip":"","_VenuePhone":"","_VenueURL":"","_VenueStateProvince":"","_VenueLat":"","_VenueLng":"","_VenueShowMap":false,"_VenueShowMapLink":false,"two_page_speed":[],"footnotes":"","_rishi_post_view_count":26},"categories":[1],"tags":[],"rishi__cb_customizer_meta":"","comments_count":"0","_links":{"self":[{"href":"https:\/\/thethinkingplanet.com\/wp-json\/wp\/v2\/posts\/1342"}],"collection":[{"href":"https:\/\/thethinkingplanet.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/thethinkingplanet.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/thethinkingplanet.com\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/thethinkingplanet.com\/wp-json\/wp\/v2\/comments?post=1342"}],"version-history":[{"count":1,"href":"https:\/\/thethinkingplanet.com\/wp-json\/wp\/v2\/posts\/1342\/revisions"}],"predecessor-version":[{"id":1349,"href":"https:\/\/thethinkingplanet.com\/wp-json\/wp\/v2\/posts\/1342\/revisions\/1349"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/thethinkingplanet.com\/wp-json\/wp\/v2\/media\/1344"}],"wp:attachment":[{"href":"https:\/\/thethinkingplanet.com\/wp-json\/wp\/v2\/media?parent=1342"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/thethinkingplanet.com\/wp-json\/wp\/v2\/categories?post=1342"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/thethinkingplanet.com\/wp-json\/wp\/v2\/tags?post=1342"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}