Retirement Calculator

It is every individual’s dream to enjoy a worry-free retirement. Thus, you must save and invest enough while you earn to enjoy a safe and comfortable retirement. This is where a retirement calculator simplifies and eases the process of retirement planning. 

  • Retirement Corpus
  • ₹48,80,000
  • Monthly Investment
  • ₹633

When you plan for retirement, you prepare your finances for the period after you end your professional journey. You can plan for retirement as soon as you get your first salary. 

In retirement planning, you must calculate your retirement expenses, determine your retirement time horizon, assess your risk appetite, and choose tax-efficient investments. 

Money loses value over time due to inflation. Therefore, the financial instruments you choose should offer returns over inflation over some time. It will help you to achieve the funds you need to live a quality retirement.

Furthermore, the average life expectancy is increasing. Investing in retirement will help you avoid relying on your children and relatives for money. Hence, when you get a raise in your salary, you should increase your retirement investments. Keep your savings for retirement untouched to let compounding work for you.

Using a retirement calculator, you can determine your retirement corpus. The sooner you start investing in retirement funds, the easier it will be to live a stress-free post-retirement lifestyle. With a retirement calculator, you can calculate how much wealth you need to grow before retiring.

Personal and financial planning are two essential elements of retirement. A personal plan will determine satisfaction during retirement, while a financial plan will assist in budgeting income and expenses.

To plan your retirement, you will need to answer a fundamental but powerful question: “What do you want to do during your retirement? ”

A financial plan can assist one in estimating whether they have adequate retirement funds for the lifestyle they envision. Pensions, employment-related benefits, and personal investments are the most common sources of income during retirement.

Putting all this into practice is easier said than done. As a result, Retirement Calculator India helps investors figure out their retirement corpus and invest accordingly.  

A retirement planner can help you estimate the amount you need in retirement. Also, it will calculate your corpus, which will generate retirement income.

Here is an example of how the retirement planning calculator works. 

Assume that you will need Rs 35,000 per month in retirement. Your current age is 40, and you plan to retire at 65. How much retirement corpus would you need to invest in a bank FD that offers an 8% return? (Assume 6% inflation)

Using the formula: FV = PV (1+r)^n

Where FV = Future Value.
r= expected inflation at 6%
PV= Present Value
n= time to retirement (65 years – 40 years) = 25 years.

FV = 35,000 (1+0.06)^25 = Rs 1,50,215.5

By multiplying the monthly amount by 12, you get a yearly figure
This gives you Rs 150215.5 * 12 = Rs 18,02,586.

As soon as you retire, you will need an annual income of Rs 18,02,586.

Let’s calculate the retirement corpus to provide an annual income of Rs 18,02,586 at the beginning of the retirement period.

●    Retirement income requirement = Rs 18,02,586
●    The retirement period is twenty years. (Life Expectancy of 80 years - Retirement Age of 60 years).
●    Return on corpus = 8%
●    The inflation rate is 6%

The inflation-adjusted return  = (1+0.08)/(1+0.06) – 1
= 1.89%/12 = 0.001575.

The retirement period in months is 240 months. (20 years *12)

PMT = monthly income at retirement adjusted for inflation = 18,02,586/12 = Rs 1,50,215.

The PV function in Excel can be used to calculate the retirement corpus. Choose Nper = 240 months and Pmt = 150215. Type = 1.

A corpus of Rs 3,00,48,832 is required to generate Rs 18,02,586 in annual income.

Hence, to receive an annual income of Rs 18,02,586 for 20 years, you must invest Rs 3,00,48,832 in the 60th year at an 8% rate of return.

Using the PMT function in Excel, calculate the monthly contributions towards the Rs 3,00,48,832 retirement corpus. As a result, you need Rs 31,262 to accumulate the required retirement fund.

With the 5Paisa Retirement Corpus Calculator, you can determine the income you need in retirement to maintain your current lifestyle. Here are the steps you need to follow to find out the same:

1.    Enter your current age: If you start saving for retirement at 30 years, your portfolio may be more aggressive. The portfolio of an investor who begins investing at 45 years old will likely be less aggressive. The corpus is therefore calculated based on your current age. The amount of a retirement fund varies from person to person. 

2.    Enter retirement age: To determine the time it will take to build your retirement corpus, you must enter your retirement and current age in the retirement age calculator. 

For example, if you start saving early at 20 years old and wish to retire at 60, you have 40 years to accumulate your retirement fund. Conversely, if you begin at a 35-year-old age, you will have 25 years to build your corpus in order to retire at 60. Therefore, when planning retirement, the gap between the current age and retirement age is crucial.

3.    Fill in other details: You will need to enter the monthly income you require in retirement, the expected inflation rate, and the expected return on your investments (before and after retirement).

4.    Get Results: The 5paisa Retirement Planning Calculator shows you what annual income you will need in retirement, how much additional retirement funds will require, and how much you need to save a month to accumulate the funds.

The 5paisa retirement planner offers the following uses:

1.    Retirement Planning
With this calculator, you can plan your finances for living after retirement. 

Every person is unique. Some people want to travel during retirement, while others want a more relaxed life. To achieve these goals, you need money. Using the calculator, you can determine the amount of money required to achieve your financial goals in retirement.

2.    Understanding finances better
Using the calculator, you can determine how much you need to save or invest each month to meet your financial goals after retirement. The calculation takes into account all other retirement investments. After that, the retirement date calculator estimates the additional amount you need to invest to reach your financial goals.

3.    Easy to use
The calculator is easy to use. You need to enter your age, retirement age, monthly expenses, and existing investments to get the desired results. 

4.    Time-saving
It can be very tiring to plan retirement manually. The 5paisa retirement calculator considers all factors and calculates the amount required upon retirement in seconds.

5.    Plan and compare
With this retirement calculator, you can identify and compare the available retirement planning strategies.

The advantages of 5paisa’s retirement calculator include the following.

●    A retirement income calculator helps you determine how much you should save each month for retirement.
●    You can use a retirement benefits calculator to determine which investments you should leverage.
●    Compare the retirement plans and options offered by most competent financial institutions. Even listed companies have retirement planning sections these days.
●    Using this calculator, you can save for high-value expenses and planned spending sessions after retirement.
●    An online retirement calculator can be helpful when you are pressed for time and need to make vital investment decisions.

The following guide is for people of various ages who want to save and invest.

●    In your 20s
Investing or saving 5% of one's salary toward retirement is sufficient if you begin investing in your 20s. As you reach your 30s, you can gradually increase the percentage to 10% as the investment horizon is around 30 years or more, and compounding is a powerful force over the long run. 

Compounding is not successful if you start early, but if you stick with it until you are 60. If you discontinue an investment shortly after starting it, it does not matter when you start investing. In the 20s, equity investments are more important than any other type of investment. Almost 90% of investments can be equity-based.

●    In your 30s
If you start saving or investing in your 30s, 10% of your salary is enough, and you can increase it gradually to 40-50%. With loan repayments, EMIs, and kids, financial responsibilities will peak at this age. As a result, investing 10% is sufficient It is possible to increase investments in the future. A substantial portion of the investment should still be equities (close to 80%). The remaining amount can be invested in debt, gold, or other assets.

●    In your 40s
Investing or saving in your 40s is not too late. Saving 15% of your salary for retirement is enough, and you can increase it gradually as time passes. For people in their 40s, equities should account for 70% of their investments. You can devote approximately 20-25% of the portfolio to debt.

●    In your 50s
Invest 20% of your salary in retirement if you are in your 50s. Until retirement, you have ten years to save, which should provide a reasonable standard of living. As you have fewer financial responsibilities at this age, try increasing investments faster. Therefore, you should start saving more. It is recommended to invest 60-65% of assets in equity. 

●    In your 60s
At this age, very few people will earn a living from employment. You deserve to relax and enjoy the savings you accumulated over the years. It is not recommended to liquidate your investments altogether. You must opt for monthly income plans or redeem investments calculatedly to meet monthly expenses. You can invest 30% of your assets in equity and 70% in debt.

Frequently Asked Questions

You can invest or save 5% of your salary toward retirement in your 20s. Gradually, you can increase it to 10% in your 30s, 15% in your 40s, and 20% in your 50s.

Mutual Funds, National Pension Schemes, Public Provident Funds, and Public Provident Funds are some of the most recommended investment avenues.

Depending on your tax slab, lump sum payouts after retirement may be subject to taxes ranging from 5% to 30%.

Yes, you can take your retirement amount as a lump sum.