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 :-)
Update May 28th, 2016: One thing which I didn't consider earlier is the major factor of plan for kids to do undergraduate study in US. If you want to do a longer term plan (which I suggest you should), please use this spreadsheet and give a proper analysis:
http://r2idiaries.blogspot.in/2016/02/r2i-budget-spreadsheet.html
Your detailed post really helps. Thank you!!
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