How Averages Can Ruin The Retirement Math

Calculating a retirement corpus on the basis of average returns can have disastrous consequences as different sequence of returns can lead to different outcomes It’s 1996, and after a long and fulfilling career, Shalini is looking forward to her retirement in a couple of weeks. After having worked hard and accumulating a good retirement corpus, she is keen on spending the next many years in leisure. Shalini is grateful that her retirement has come after the tumultuous years of 1990-1991 when the Indian economy went through a crisis. Much to her relief, the economic liberalisation that followed stabilised the economy. She was hopeful for better days. A disciplined saver, she has accumulated a retirement corpus of Rs 1 crore. This consists of a mix of Employees’ Provident Fund (EPF), Public Provident Fund (PPF), fixed deposits, mutual funds and shares. Before her official...