This is a tough question to answer but let me give this a try. The usual response would be - that depends on a person's lifestyle but let me try with the current cost of living in a city like Bangalore.
Main cost (like in Western countries) is the housing. Next comes the transportation, kids education, food etc. Let me break those up further with some specific numbers...
Housing: Assuming a decent locality and closer to IT hubs,
- If you are going to rent, it can vary from 15,000 to 30,000/pm.
- If you are going to buy a site and construct, estimate would be atleast from 60lakhs to 1 Crore (assuming a 1500 sq ft apartment or 30x40 site)
- If you are going to buy an apartment, estimate would be from 70lakhs to 90 lakhs
Transportation:
Using public transportation like usual buses wouldn't be an option. These days lots of techies use the A/C Volvo buses in Bangalore that BMTC has provided and that works nicely if you are staying closer to the bus connection.
- If you are going to buy a car, it would cost you from 7 lakhs to 12 lakhs.
- If you are going to take an auto, daily cost would be anywhere from Rs 100 to Rs 200
Kids education:
- If the kids have grown up in US, don't consider regular schools at least for first few years. Any good international school costs at least 1 lakh/kid (this is normally including the transportation). It can go up as high as 3 lakhs/year.
Food etc:
- Here it depends on lifestyle, i.e, how many times you eat out, what type of resturant is considered decent etc - note any average buffet in a decent resturant starts around Rs. 200 these days and can go upto Rs. 800! (and I am NOT talking about Leela palace here!). With two kids, your normal grocery bill would be in the range of Rs. 2000 to Rs. 3000/week.
Household expenses:
- This would be for house maid, driver etc. You can budget Rs. 1000-2000(based on the home size) for the maid and Rs. 7000-8000 for the driver, if you keep one. Add an extra Rs. 3000 or so, if you are going to have a cook(part time).
So, all in all, assuming you are renting, your monthly expenditure would be something like this:
Rent: 20,000
Car: 5,000 (petrol only)
Kid(1): 10,000
Kid(2): 10,000
Food etc: 10,000
Household:10,000
Misc: 5,000
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Total: 70,000
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Head spinning already looking at the numbers? No kidding, that's right, Bangalore is an expensive place to live! Assuming your after-tax take home is @ Rs. 1 lakh, you would have a bit of savings for those yearly travel plans! (I am conservatively assuming 1 lakh but based on your experience and whether single person or two people are working, it could be much higher). However, the numbers here are assuming 2 kids - you can subtract around Rs. 20,000 if you have one kid.
Now, back to the topic of how much R2I savings you need before you head back. As you can see, the earnings you do here can comfortably take care of expenses with some left as savings. So, the funds you need to consider is the amount needed to buy/construct a home once you are back here + the savings you need to keep back there (say, for kids higher education, assuming they will be back for studies or some funds for you re-start if you return back). After returning as R2I, it makese sense to own your home rather than rent or have a home loan. As I said earlier, the own home would need anywhere from 60 lakhs to 1 crore at the minimum. Assuming current rate of Rs. 55 for a Dollar, that would be $150,000. You will need some funds for initial expenditure like buying a car, home appliance etc, which could total upto Rs. 15 lakhs or so. So, add another $25,000 for that. So, your total R2I needs are $175,000.
If you are keeping back another $125,000, that would total up to a savings of $300,000. Of course, you can do R2I with much less, if you are going to take a home loan here (which will reduce your savings here) or don't plan to keep savings back where ever you are. Also, the investments you do in India(like real estate, life insurance etc) can be done based on your earning potential here and normally there isn't a need to account for that.
In summary, you can start R2I with a savings of $300,000 or so. This is just a guidance figure, your mileages may vary significantly :-)
Very informative details on r2i. We are planning to r2i as well, your blog is really helpful knowing the various aspects on r2i.
ReplyDeleteGood to know you found it useful, good luck for your R2I ...
ReplyDeleteWe are looking to buy a house near budigere cross, on Old madras rd. Any input abt that area is appreciated. From what I have heard, it will take another 5 yrs for that area to develop. Any other areas in Bangalore that you would suggest?
ReplyDeleteHave seen that area - there is lots of housing activity going on there right now, with many apartments and villas coming up. The place is closer to ITPL (within 10 kms) and has access to new airport as well. Heard that the road to airport will be made a two-lane road (exactly when that will happen is a big TBD like any other road in Bangalore!). Also, the old Madras road has good connectivity to MG Road(hard to believe but that section of Old Madras Road is like a US highway and literally unused as of now). One issue to consider is water availability - no Kavari water in any near future here and not sure about borewell water availability.
ReplyDeleteIn summary, I think this area will develop within 2-3 years (won't take 5 years). Compared to this area, other fast developing areas are around Hebbal/new Airport(rates are already on the higher side here), Sarjapur Road(already crowded with new apartment projects). Mysore road is getting good amount of construction but doesn't work well as a location for the IT crowd.
Thanks a lot for the info.
ReplyDeleteHi Mohan, Somehow the grand majority of the R2I folks belong to the IT industry, where there is a multitude of extremely well-paying jobs, a scenario which is not likely to change in the foreseeable future. We are a physician couple, doing well in the States, but with dubious prospects in India, mostly because our industry looks inward and not outward for revenue. Also because we practise medicine conscientiously, which makes us slight misfits in the current climate, especially in India.
ReplyDeleteSince most of our 20s and early thirties were just spent getting an education ( a very expensive proposition), we have only very recently started making any savings..As we inch close to 40, with our kids getting older, we do not know when is the perfect time to R2I. I guess we have to work on the presumption that we will have to live mostly off our savings in India, India pays doctors quite poorly. We will relocate to a Tier II city. Is 300,000 $ a good number for us as well, or should be keep chasing that moving target...
BTW, I am not even sure why I am posting this here..I guess it just gets tiring after a while when all you see on R2I forums is people who started working ( and saving) at 25, and will certainly be comfortably well-off in India, and still undecided about when and whether to R2I:) We are no match ( earning potential wise) for most of you, and still, if it makes you feel any better, we have solid plans to R2I by 2014.
Thanks for the reflections :-) I am sure there are several others in the same boat as yours, just like the techies.
ReplyDeleteDefinitely I don't have lot of exposure on how the climate is in the medical field but for sure have seen large hospitals like Columbia Asia coming up and opening up multiple setups in Bangalore. I would assume there is a good demand for doctors (with specific specializations) now. Believe it or not, we weren't able to get the Pediatrician appointment last Saturday since she was fully booked! The doctors visits these days cost from Rs. 200 to Rs. 300/visit.
Personally, I think $300,000 is a good number, assuming you can maintain the family with current earnings India. Of course, this depends on your lifestyle, how many kids you have, what kind of education you want to afford (in India for lower grades and US for higher grades etc.
Solid plan for 2014 is a very good start - if you start early, you can save quite a bit (like selling off stuff, getting a place to stay in India or possibly even invest in an apartment that will be ready by then etc). Good luck for your R2I ...
Hi Mohan, I thought of R2I, now this scares the s..t out of my peaceful life here in Dubai!
ReplyDeleteAgree, looking at the numbers, it can be scary. As I said, Bangalore is an expensive place to live. However, there are ranges of choices but in general you don't get what you paid for (like neat roads, clean area etc). Other option is to buy land in the outside areas and rent an apartment until you are able to construct and move.
ReplyDeleteUnfortunately, the education part has become quite expensive and to get a decent school which is comparable to outside of India, it pays dearly...
We are planning to return to Mumbai in next 2 years with savings\investment of around 3.5 cr + loan free house + monthly passive\rental income of Rs. 40,000/-. In next 2 years I will be 45 and not planning to do any full time job once R2I. No other financial obligations once R2I. What you think, is it good enough for early retirement for both of us? Planning to live a mid-class life style.
ReplyDeleteMy feeling is you have built enough funds to take care of you/family once you R2I. As I listed above, main expenditure is buying the house (on which you want to avoid the mortgage if possible). That is taken care in your case. You didn't mention about your kid(s) - that is another major expenditure these days(unfortunately). The price tag can come to ~ 2 lakhs+/year for a decent school in Bangalore these days, starting from 1st grade itself!. Not sure about Mumbai though. Assuming you have one kid, education needs will not be that bad and you should be able to take care of that as well.
ReplyDeleteI think you are in a good position to make the move, good luck!
Thanks and really appreciate your response.
DeleteHi Mohan, First of all congratulations on your R2I. We are in the same boat. Family already moved to Hyd in June 2013. I am shuttling between US and India. Trying for Jobs since Last June/July in Program/Delivery Management roles in Hyd/Blr. nothing worked out so far. Do you think it will be easy if I try the job hunt from India. It gives me jitters to return back to India without a Job in Hand. I have been in the US since 16+ years
ReplyDeleteHi Anonymous,
ReplyDeleteAbout your question "Do you think it will be easy if I try the job hunt from India." -- personally, I didn't go thru' this cycle since it was a lateral move for me. As of now, the job market in India doesn't seem to be that hot. Specially, the big companies are not hiring much from outside, it is more of internal rotations. I can understand you feelings when you hesitate to move without a job in India. As you look for senior positions, it could get bit harder since there are not that many such positions + salary expense for employees is higher. However, if you have good hands-on experience(talking about software field), it could be easier to get one.
You could try couple of things - post in Monster India and see responses. Also, attend job fairs in US where they are looking for Indian positions. Continue the shuttling for some more time and keep the search active - some employers might be willing to hire based on phone discussions or at least go beyond first few levels of filter. If you financially well off, you could consider moving back and continue the search, assuming it could take some time before you land a right position. Personally, I wasn't ready to move unless I had something in hand...
Hope this helps. Good luck for your move...
What are the changes in the Household expenses since 2012? Appreciate if you can put up something similar for 2014 like you did in 2012.
ReplyDeleteThanks for a detailed post. I am considering a move to Chennai in the next couple of months with an approximate offer of INR 23lacs. My profile is in IT with a 5 year old and a 1 year old. Any thoughts on if the package offered is sufficient?
ReplyDeleteHi, not sure what type and years of experience you have. Assuming you have 10-12 years of experience, I would say 23 lacs is a decent package.
ReplyDeleteAlso, check whether your range is within 50-60% of US salary - it might be easier to negotiate within same company move. Even if it is to a new company, negotiate on the basis of this - you can go as high as 70% as well, depending on the company you are going to join.
Hope this helps...
Hello, I have 15yrs experience in hardware engineering.
ReplyDeletehave been offered 44L base + 27L bonus in an MNC
Is this the baseline salary for a top tier engineer with 15 yrs exp?
@last anonymous,
ReplyDeleteNot sure which city you are relocating to. In general, I would say this is a good offer. You won't find many engineers who started with companies here getting paid at this level and it would take much longer for them to get there. I don't have much exposure on the hardware side of things hence can't talk about baseline salary but these vary a lot from company to company, even within MNCs.
Hope this helps ..
Been dreaming, thinking and planning early retirement for few yrs. Reason is to quit the rat race. Finally almost there ( 1 month), will turn 45.
ReplyDeleteWill return to Mumbai in June 2015. As mentioned in my earlier post in June '13, no plan to do any full time job. R2I after 15 yrs, too many things to setup ( will have all time in the world :) ) . Hopefully all goes fine and finally will be able to do things without thinking of the pay cheque.
@anonymous: Congratulations on the dream coming true!. Have seen many, many folks planning on R2I but never coming thru' for various reasons. So, definitely not an easy thing to do. Good luck and I am sure you will enjoy your stay here - especially without the pay cheque pressure :-)
ReplyDeleteHello there,
ReplyDeleteExcellent article for people like me who are thinking about r2i. I have an 8 year old and planning to return by July 2018(before my kid reaching to that 'point of no return' age :) ). This post of yours has made me re-think if I am ready financially. With ~1.5 crore in savings/investment and couple of apartments in Pune, it seems that I should stay longer. But again, I have seen few of my friends return to US as their kids couldn't adjust in India(Bangalore). Also, I was thinking about moving away from corporate jobs to farming on my ancestral land. But it seems that it needs to stay a dream for few more years. Your thoughts on this will be helpful for guiding me in right direction.
Re Anony...: Financial needs vary from family to family. Pune needs might be bit lower as compared to Bangalore as well (at least as of now, I know that is changing fast, having visited Pune last year). If have serious thoughts on financial aspects (and not other aspects of R2I), suggest to evaluate your budget using the spreadsheet I covered in one of recent posts here:
ReplyDeletehttp://r2idiaries.blogspot.in/2016/02/r2i-budget-spreadsheet.html
Seems like you are well placed with your current savings but whether that is enough or not is something only you can decide. (for ex, kids doing undergrad in US versus in India etc). But, if you are thinking of moving to farming, there is some serious change (!!) and your needs might be lot less since you are planning for longer term/permanent stay in India. IMO, with a decent savings, living permanently in India is not an issue financially but if you plan to go back West, that is when all calculations change and you need to re-think whether you have enough funds after working for few years in India.
Good luck with your R2I efforts...
Hi Mohan
ReplyDeleteCongratulation on your R2I. I am 33 years old working in USA since 2011 so only 7+ years spent in USA with single income so couldn't save much, i have close to 2Cr in Savings/ Investment but want to R2I in Mid 2019. The reason for R2I is purely due to parents and family. I am married and have 1 kid (2 years old). i will continue to work mostly in Ahmadabad or Mumbai and my wife can start working after my son starts going in pre-school.
Should i still continue to work to save more in USA ? or this saving is enough to live middle class life style in India. My son will probably come to USA for his higher studies.
Your thoughts and guidance will really helped me to take decision.