Kolkata: Life after retirement could be enjoyable or miserable, depending upon whether you stay healthy. There is another equally significant factor that can equally make or mar the post-retirement years, and that is financial freedom. It is that segment of one’s life when one no longer works for a living. Stoppage of work also leads of stoppage of salary. So how does one take care of daily expenditure, which is rising every year.
The response to this is, retirement planning, the significance of which is only going up with each passing year. The problem with retirement planning is, it is a bit like throwing stones in the dark or at a goal which is so far away in time that it could appear hazy. However, there is an online tool that can help one significantly with retirement planning. It is called retirement planning calculator.
Two questions that are on many lips are: Is Rs 1 crore enough to retire at 50 and how would I ensure a steady income after retirement. Let’s have a look as to how one can use the retirement planning calculator to answer these questions.
What is the formula for a retirement plan
There is no formula for a retirement plan since the constitution of every family, their needs and standard of life are different. However, one can still use the online retirement planning calculator to make an intelligent estimate about the investment one needs to make after taking into consideration one’s age, and financial goal. Let’s assume that an individual decides to begin investments at the age of 25 with a view to creating a sound financial base when he/she turns 60. Let’s see how one can use the calculator to set a goal and plan the journey towards it.
Let’s assume the following for this individual:
Current age: 25 years
Desired retirement age: 60 years
Life expectancy: 85 years
Monthly income required in retirement years: Rs 2 lakh
Expected inflation rate: 6%
Expected return on investment (Pre-retirement): 12%
Expected return on investment (Post-retirement): 8%
Existing retirement fund: Rs 1 lakh
The calculator will provide you the following results:
Annual income required immediately after retirement: Rs 1.84 crore
Total corpus required for after retirement: Rs 36.22 crore
Monthly savings required to accumulate the corpus: Rs 56,314.29
Scenario building post retirement
The user can easily change any variable in the above calculator and build different scenarios. But some of the points need to be highlighted. If the rate of inflation declines, the amount of investment one has to make to reach the same financial goal also declines ie, one has to save less to create the same corpus. For example, in the above calculator, if the inflation rate is set at 5%, the monthly investment required drops to Rs 35,927. Also if one starts at a younger age, one can invest less every month to have the same final result.
With rising financial uncertainty, retirement planning is becoming a major headache for the common man. With the help of online retirement planning calculator one can chalk out one’s retirement planning, and after factoring in inflation. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
