Retirement Planning Calculator
Retirement Planning Calculator
Retirement Planning is the process of determining a total corpus you would need to live your life with the same standard of living as present up to the age of death.
The amount required post-retirement can vary from person to person, based on several reasons like your current age, desired retirement age, and the amount you would like to invest each month or year.
The retirement planning calculator helps you in determining the total corpus you would have if a particular amount is invested over a given time period. It helps in determining the cost of life in future by adjusting the present cost of life to inflation.
How does the Retirement Planning Calculator work?
In order to use the Retirement Planning Calculator, one should know the following terms:
Annual expenses as of today means the total expenses done by you in a year on lifestyle. This includes daily expenses, medical expenses, etc.
Inflation Rate is the rate at which the price of goods and services are rising per annum.
Time period left for retirement shows the number of working years left in your life and all investments and savings shall be made within this time period. As a person’s working life is limited, its best to start Retirement Planning at an early age rather than doing it in last few days of the retirement.
Life Expectancy after retirement is the number of years you assume to live after retirement.
Expected rate of return is the percentage returns you expect to earn from investing in financial products for your retirement.
Expected Annual Expenditure at the time of Retirement is the inflated cost of living in future which is calculated using the inflation rate and annual expenses of today.
Retirement Corpus Required to meet the Daily Expenses is equal to Expected Annual Expense at the time of retirement multiply by the Time Period left for Retirement.
Amount to be Invested in Monthly SIP until retirement day is the total monthly investment you are required to make until the age of retirement to meet the retirement corpus needed.
Formulas:
A = P(1 + r/n)n
FV = P [ (1+i)^t-1 ] * (1+i)/i
Monthly SIP = FV/(n*12)
Example:
If you are 30 years old and plan to retire at 60, you have an investing period of 30 years.
During those 30 years, if you invest 10% of your annual income every year towards a retirement plan at an assumed 8% return rate, the retirement planning calculator will show you how much corpus you can amass by then.
It is advisable to start investing early towards your retirement rather than doing it all in the last minute, as the younger you are, the more the compounding effect and the higher the returns you can gain.
Why should you use a Retirement Planning Calculator online?
Using the Retirement Planning Calculator online helps you in making a financial decision on how much to invest on a monthly basis today for the retirement? on a real-time basis. Thus, helping you make a proper financial plan for your retirement.
Advantages of using a Retirement Planning Calculator:
Listed below are few advantages of using a Retirement Planning Calculator:
The Retirement Planning Calculator helps you in calculating the SIP amount you should be investing towards your retirement goal irrespective of the currency denomination, that is, you can use it for calculation in INR, USD, JPY, EUR or any currency of your choice.
Retirement Planning Calculator helps you in making financial decisions quickly that is because you can compare the various financial opportunities on different parameters like Inflation, Tenure, Expected Rate of Return, etc on a real time basis.
The Retirement Planning Calculator does all the mathematics functions online with few inputs on your end. No coding or doing the maths is needed, this makes it easy to operate.
You can calculate the corpus required and compare it to a particular investment to see if it matches with your retirement corpus requirement. This helps in making a perfect financial decision.