How much should I save before I retire?

The critical question for all retirees is "Have I saved up enough money to last the remainder of my lifetime?"

I had written earlier, about how to calculate the corpus you need to be able to retire financially independent.  The amount you need depends on only 2 factors, your estimated annual expenses, and the number of years you need to live in retirement.  

Here is how I have calculated the corpus I will need, before I can retire.  The first thing I did was to calculate my estimated annual expenses.  I am now estimating that I will need to live in retirement for 50 years.  I know this sounds like a very large number of years, but then the whole idea is to be a little conservative, to ensure that I don't run out of money in my golden years! Then I refer to the table I had worked on earlier, to check how much my retirement corpus should be.  I have reproduced the table here below for reference.

I will assume that during retirement my investments will continue to give me a return that beats inflation by 2%.  I think this is a reasonable rate of return and can be achieved by a prudent mix of equity and debt investments.  So for 50 retirement years at 2% real rate of return, from the table I see that I need to have saved my ~32 times annual expenses.  

I would also like to provide for my kids when they grow up.  We have decided to leave 2 years worth of annual expenses for each kid.  Finally over 50 years it is likely that we will have to spend atleast twice on extensive home repairs.  So we have allocated another 2 years worth of annual expenses to big ticket home maintenance.  So overall this leads to 38 times annual expenses (32 + 2+ 2+ 2) as the magic number that I need to save up, to be ready for a peaceful retirement.

Next week I will write about my journey and current status to reaching this lofty goal of 32 times annual expenses as savings!