How to make retirement planning by 30:30:30:10 rule?

Gautam Kalia, SVP and Principal Super Investor at Sharekhan by BNP Paribas

Retirement fund allocation after retirement is as important as saving for retirement. The 30:30:30:10 rule can be a good way to allocate retirement funds. From the total retirement corpus, the first 30% is meant for children as inheritance and the investor can invest this corpus in high risk investments like stocks or equity mutual funds.

The next 30% is for your own future to protect against inflation and as the risk appetite of the investor is low, the investor should allocate this corpus to hybrid mutual fund schemes. The other 30% is for regular expenses and the investor should invest this corpus in debt category schemes. The remaining 10% allocation should be invested in debt liquid funds or savings account for emergency fund.

Nitin Rao, Head of Products and Offerings, Epsilon Money Mart

When we think about planning for retirement, we always envision. No stage of income, reliance on accumulated wealth. General idea like how to accumulate, allocate and put it to good use. The 30-30-30-10 rule is an approach that helps you allocate your income for retirement. The rule says to first define your net monthly income.

The next step is to allocate 30% of your income towards housing expenses like rent, EMI. Step 3 Ask to allocate 30% of your income to essential expenses such as utilities, groceries, gas, internet, etc. Step 4 – Allocate 30% of your income to your retirement plan. In the last step – the remaining 10% should be spent on your entertainment like movies, eating out etc.

This approach is beneficial for those who want to control their spending and prioritize their financial goals. It’s important to note that the 30:30:30:10 rule is only a general guideline, and you should adjust your savings plan based on your personal circumstances and financial goals.

Kuldeep Parashar, CEO and co-founder of Pensionbox

Retirement planning is an important aspect of one’s financial life, and there are several rules and guidelines that experts recommend to follow. One of the popular ones is the 30:30:30:10 rule, where it suggests investing 30% of savings in stocks, 30% in bonds, 30% in real estate, and the remaining 10% in cash or cash equivalents. However, it is important to understand that this rule is general and may not be true for everyone.

A typical retirement plan should take into account individual financial situations, goals, risks, tolerances and time frames. The rule of thumb may not work for everyone as everyone’s financial situation, goals and risk appetite are different. Hence, we believe in dynamic retirement planning that iterates with real data insights and changes as life changes.

Dynamic retirement planning involves continuous monitoring and adjustment of the plan based on changes in the individual’s financial status and goals. It is essential to understand that retirement planning is not a one-time event but an ongoing process that requires constant monitoring and adjustments. For example, if there is a sudden change in income, expenses or market conditions, the retirement plan should be adjusted accordingly.

Retirement planning is an ongoing process that requires flexibility and adaptability. While general rules of thumb can provide a starting point, and according to Pensionbox Insights, 76% of Indians prefer individual retirement, we recommend data-driven personalized plans that consider an individual’s unique financial circumstances.

Mayank Bhatnagar, Chief Operating Officer, Finage

Over the years, several general rules have come into effect to help you strike the important balance between spending for your lifestyle and saving for your future goals. One of the more popular rules is the 30-30-30-10 rule. In short – it spends the first 30% of your income on housing (EMI, rent, home maintenance etc.), the next 30% on necessities (grocery, utility bills and so on), the next 30% for your future Saves %. goals and spend the remaining 10% on your “wants” – such as the latest iPhone model! In addition, some proponents of this rule say that you should save half of the 30% — ie 15% — for your retirement.

While these thumb rules are better than no guideposts at all, we believe they don’t do justice to an individual’s individual goals in today’s age of hyper-customization. For example, 30% may be too much — or too little — depending on a person’s standard of living, income level and personal preferences. For example, take the FIRE (Financial Independence, Retire Early) method, which is gaining popularity among a lot of millennials these days.

Proponents of this method are saving anything from 50% to 70% of their after-tax income for their retirement, in an effort to retire in their late 40s or early 50s! On the other hand, we have entrepreneurs who are well into their 60s or 70s with every intention of working and earning well. For such people, saving even 5% of their income every month can be sufficient for their retirement. Some of them do not want to save for their retirement at all, as they believe that their business income and rent will be more than enough for their retirement.

A great financial plan is perfectly customized to an individual’s goals – not only in terms of target amounts and target dates, but also in terms of strategies. For example, a step-up plan combined with annual lump-sum deployment of your bonuses may be more appropriate for your retirement goal than following an oversimplified thumb rule. A combination of a human advisor + technology can help you visualize different scenarios and arrive at the best possible approach to save for your retirement while enjoying a fulfilling lifestyle.