Retirement Calculator
Your Retirement Plan
you need to invest
What is a Retirement Calculator?
A
retirement
calculator is an online tool that helps you
determine
how much money you will need to cover your
retirement
needs. It considers key factors such as your
current
age, desired retirement age, monthly
expenses, inflation
rate and expected investment
returns.
Using
these details, it provides a realistic
picture of the
retirement corpus you will need and how much
you should
save or invest regularly to reach that goal.
The
calculator is quick, easy to use and gives
accurate
results to help you plan for the future.
How to use the retirement calculator?
Using a retirement calculator is simple and straightforward. Here’s a step-by-step guide:
Enter your details
Fill in the required information in the calculator, such as:
Your current age
Current expenses
Expected retirement
age
Expected rate of
inflation
Life expectancy
Expected rate of
return
Click on “Calculate”
Once you have entered all the details, click on the calculate button.
View your retirement corpus
The calculator will display the total amount you would need at the time of retirement to maintain your desired lifestyle.
Check the required monthly investment
It will also show how much you need to invest monthly to build the required retirement corpus within your chosen time frame.
How does the retirement calculator work with an example?
A retirement planning calculator helps you estimate how much money you will need after you retire. It takes into account several key factors such as your current age, retirement age, expected inflation rate, life expectancy, expected return on investment and current monthly expenses. Using these details, it calculates the total retirement corpus you will need and how much you should invest regularly to reach that goal.
For example, let's say:
is 25
is 80
at 65
inflation rate is 6%
on investment is
10%
monthly expenses
are ₹ 30,000
investment is 10%
rate is 6%
are ₹ 30,000
How is your retirement corpus calculated by the online retirement calculators?
Here’s how the retirement calculator calculates your estimated retirement needs:
Step 1:
Based on your current age and your target retirement age, the calculator determines how many working years you have left to build your corpus. For example, if you are 40 and plan to retire at 60, you have 20 years to save and invest.
Step 2:
From your expected life expectancy, the retirement calculator determines how long your retirement will last.
Step 3:
The calculator projects your future expenses by adjusting for inflation. The inflation adjusted future expenses will roughly represent the corpus you would require at the time of retirement. From this, your required monthly savings amount is calculated.
The Future value formula used by the calculator is as follows:
FV = PV * (1+r)n
Where,
FV = Future Value
PV = Present Value
r = Expected inflation rate
n = Years remaining until retirement
Why is retirement planning important?
Financial security
Retirement planning is important to make sure that you have enough funds to meet your needs after you retire.
Goal-based planning
Retirement planning helps you save for specific retirement goals like healthcare, housing, travel, entrepreneurial and lifestyle expenses.
Disciplined long-term saving
Retirement planning allows you to build your savings gradually over the years instead of rushing at the last minute.
Quality of life post-retirement
Supports a comfortable and
stress-free
retirement where you are not
financially
dependent on others.
Protects
you against
rising inflation so your
post-retirement income
keeps up
with increasing costs.
How much retirement corpus do you need?
The
retirement
corpus you need is unique to you and depends
on several
individual factors. These include your
lifestyle
expectations, healthcare needs, life
expectancy, planned
retirement age, family composition, savings,
expected
return on your investments and whether you
have any
dependents.
Inflation is another
crucial factor,
as it directly impacts your future expenses
and
purchasing power.
You can use the above
retirement
corpus calculator to roughly estimate your
retirement
needs.
Age based guide to Retirement Planning and building your Retirement Corpus?
What are the Benefits of using an Online Retirement Calculator?
What are the Benefits of using an Online Retirement Calculator?
Precise Estimates
A retirement calculator provides an estimate of how much you need to save for your retirement, helping you plan effectively and avoid financial shortfalls later.
How does a Retirement Calculator help in Planning your Retirement?
Benefits of using retirement calculator
Using a retirement calculator
helps in
planning for life post-retirement.
You can assess how much post-retirement
income will be
enough to maintain
your present lifestyle.
Using a retirement calculator helps in planning for life post-retirement. You can assess how much post- retirement income will be enough to maintain your present lifestyle.
Provides financial clarity on how much income you will have post-retirement.
Helps you consider the effects of inflation and compare different yields earned through varying interest rates.
You can see how much corpus you can earn at 4%, 6%, or 8% rates per year and compare the returns yielded by different retirement plans.
3 Quick steps for Retirement Planning
Before you use a retirement calculating tool, you need to first assess some factors at your end. To simplify the process, follow this quick 3-step approach:
Note down your present monthly or yearly expenses. Add everything you spend your money towards – groceries, bills, utilities, loan repayments, and so on. Keep this amount aside. Note down how much you save. Now, envision how much you will spend on these expenses once you have retired.
Once you have an approximate amount, multiply it with the inflation rate during your retirement age. Let’s say, the inflation rate will be 6%. So, the additional post-retirement expenses in the next year would be = annual expenses x inflation rate (6%). Let’s put this in numbers to explain this a bit better.
Let’s say you retire at 60. The average life expectancy rate at birth in urban India is 72.6 *. Now, let’s say your annual expenses at age 60 are ₹ 4 lakh per year. With inflation, they will keep increasing each year. So, from the age of 60 till age 72, assuming a 6% rate of inflation, your annual expenses will look like:
| Age | 60 | 61 | 62 | 63 | 64 | 65 | 66 | 67 | 68 | 69 | 70 | 71 | 72 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Annual expenses | 4,00,000 | 4,24,000 | 4,49,440 | 4,76,460 | 5,01,991 | 5,35,290 | 5,67,408 | 6,01,452 | 6,37,439 | 6,75,792 | 7,16,339 | 7,59,319 | 8,04,879 |
| Assumed Inflation at 6% | 24000 | 25,400 | 26,966 | 28,584 | 30,299 | 32,117 | 34,044 | 36,087 | 38,252 | 40,547 | 42,980 | 45,559 | 48,293 |
| Total money accounting for inflation needed next year | 4,24,000 | 4,49,440 | 4,76,460 | 5,01,991 | 5,35,290 | 5,67,408 | 6,01,452 | 6,37,439 | 6,75,792 | 7,16,339 | 7,59,319 | 8,04,879 | 8,53,171 |
