How much for retirement

I see so many calculations on net where people try to predict what you need to save by the time you retire. As inflation in India was high and expected to be high for some time these figures tend to be very high. You get numbers like 5 crores if your annual expenses are 5 Lakhs and you are in mid 30s. But I find targeting a number difficult. There are so many parameters involved that you know what is sufficient only when every thing is over.

It is like batting first in a one day match. You set out to score runs. How many you need? You will know only after match is over. from prior experience you know that scoring 300 gives you a safe margin. But it is never guaranteed. A team scoring 400+ lost a match. At the same time around 25 years ago that safe number used to be 250. So even the safe number changes over time. So what do the batsmen do? They score as much as they can. They don't stop when they reach 300. If they lose a few wickets early they don't stop trying thinking 300 is not possible. What works most of the time is enjoy the time in the middle, maximize the runs you get. First point is important as otherwise your getting out is more likely. So do that, play for 50 overs and hope for your defense (bowling) to do what is needed.

Something similar is needed for retirement.

1. Earn as much as you can. 
2. Spend as much as you need. 
3. Try to maximize the returns on the savings taking risk according to your appetite

Each of these requires further learning. But it is like cricket again. You still need to have goals. Like a batsman plans for next 5 overs plan for reaching a number in say next 2 years. Sometime a good bowler comes and survival is priority (like investment in recession times), a junk bowler comes and need to score runs (bull market) but don't throw away wicket. Most on the time accumulate runs (Range bound market) etc. The batsman still needs to have skill (your investment acumen).

Now the second point spend as much as you need is the tricky one. What you need depends on you. I would say never compromise on what you need. But if you think that 20 Lakh car or 50 thousand watch is what you need, I only wish they are not significant percentage of your savings. I have my own rules.

• Don't upgrade a car on loan and whose cost is more than 5% your liquid wealth. (May not apply for the first car but even for that keep a limit)
• Don't upgrade a home whose cost is more than 25% of your liquid wealth. Take a loan only if you get good deal as it may turn better due to tax advantages. ( May not apply for first home but keep a reasonable limit)
• A second home is always investment and make sure you are diversifying properly. My rule of thumb is the real estate should not be more than 25% of your wealth. If you are selling your home and buying a better one, remember the 25% liquid wealth rule (this time strictly as you already have a home)
• Jewellary is not investment. They are commodity like your phone or car. Only thing is they are better if you need money but the goal is to have enough wealth to not need money. If you think jewellary is investment and invest a good percentage in it, you will never reach enough wealth.
• Gold is investment but personally I will not invest more than 5% of my wealth in it but always remember Gold and Jewellary are different. Antique jewellary is different. It is like investing in art. If you have aptitude and eye for it, go for it.