I’m a 36-year-old single individual living with my elderly father. We don’t currently own any property. My net worth stands at ₹1.2 crore, spread across EPF, PPF, and other investments. I earn a gross annual salary of ₹30 lakh, with annual living expenses of around ₹10 lakh.
What should my target net worth be by the age of 41 to achieve financial freedom?
Based on your financial profile and current market assumptions, your target net worth to achieve financial freedom by age 41 is approximately ₹4.24 crore. This is the corpus you would need to retire at 41 and maintain your lifestyle until the age of 85, assuming no further income from work.
This estimate is built on the assumption of ₹10 lakh in annual expenses today, with pre-retirement inflation of 7%, post-retirement inflation of 6%, 12% annual returns before retirement, and 8% returns post-retirement.
With your existing net worth of ₹1.2 crore and assuming a 10% annual portfolio return, your wealth could grow to around ₹1.93 crore by age 41. That leaves a shortfall of ₹2.31 crore, which must be bridged through new investments.
To meet this gap within five years, you would need to invest approximately ₹2.7 lakh per month (or ₹32.4 lakh annually). While your income of ₹30 lakh provides some leeway, setting aside this amount may not be practical once you account for taxes and essential living expenses.
Given this, you may need to either delay your retirement by a few years, increase your income, or moderate your expectations around early retirement.
In conclusion, your Financial Independence Number is ₹4.24 crore. Reaching it in five years is an ambitious goal, but not impossible. With aggressive saving, disciplined investing, and possibly a slightly longer time horizon, it’s within reach.
Response shared by Nehal Mota, Co-Founder & CEO,Finnovate
