Nest egg: How NRIs save to fly back for the sunset years

The financial benefits for non-resident Indians become apparent when they earn in foreign currencies and convert them to Indian rupees to invest and save, leading to significant growth in rupee terms.

- Satya Sontanam

You may have heard anecdotes of friends and family members who packed their bags to pursue opportunities overseas, but planned to eventually settle down in India after retirement. The financial benefits for non-resident Indians become apparent when they earn in foreign currencies and convert them to Indian rupees to invest and save, leading to significant growth in rupee terms.

Let’s consider the case of individuals A and B, both aiming to accumulate a nest egg of ₹8.8 crore for a comfortable life in their sunset years. To achieve this, they would need to save approximately ₹4.67 lakh every year, starting at 30 years to retire at 60 with the desired corpus.

Assume A earns ₹40 lakh per annum in India, while B works in the US with an annual package of $100,000. Some Indian tech professionals based in the US, whom we previously interviewed, asserted that a $100,000 salary in the US can provide a lifestyle akin to what ₹40 lakh would offer in India due to the difference in cost of living.

Although A and B may enjoy similar lifestyles in terms of expenses, A must allocate a larger portion of her income toward retirement savings. In this case, A needs to invest 11.6% of her earnings, while B can contribute less than half of that amount or just 5.6% of her annual income, to achieve the target corpus.

However, this financial advantage for NRIs dissipates if they decide to retire outside India, especially in developed countries. In such instances, the savings rate may need to exceed 11% to cover the higher cost of living in those countries.