How to Calculate Your Retirement Planning?

Personal Finance

The retirement years are an important phase of life. It is the point at which you are finally free of worldly concerns. After childhood, it is retirement life, where you live a stressless life. But you need to be financially independent in those sunset years. You don’t want to be economically dependent during this time. So, how do you achieve that goal?

It’s simple! A proper retirement plan can help you achieve that. Use a retirement calculator to plan. 

Retirement Planning: The Gateway to Financial Freedom

Do you want to lead a financially independent retirement life? Make decisions in advance of your retirement years. It helps you secure your retirement years financially. You can even help your loved ones during unfortunate events. A good retirement plan makes you financially free. You can even pursue your dreams during this time without worrying about money. 

Retirement Corpus: The Foundation of Retirement Planning

The first step toward this is creating a retirement corpus. It is your total fund for your post-retirement life. Retirement corpus is the throne you can fall upon during later life. Whether it’s short vacations or medical emergencies, it helps you cover everything. So, how do you determine the amount you need for retirement planning?

The answer is simple—by using the retirement calculator!

The Retirement Calculator

The retirement calculator helps you know the lump-sum amount you need during retirement. You can take the necessary steps before retiring to achieve this. First, fill in the necessary inputs. Then, it calculates your financial needs. You learn how much you need to maintain your lifestyle during retirement.

The following are the benefits of using a retirement calculator:

  • Clarifies how much income you need for post-retirement.
  • Accounts for inflation and growth rates.
  • You can change your inputs to get comparable results. For instance, you can change the ROI of assets, expenses, etc. It helps to determine the best possible scenario.
  • The calculator helps you make a retirement plan. Follow it diligently. You will be free in your retirement life.

The retirement calculator calculates based on your input. Let’s understand how it works.

How to Use a Retirement Calculator

First, you need to give inputs to the retirement calculator. 

  • Current Age: What is your current age? Add the time when using the retirement calculator.
  • Desired Retirement Age: What is the age at which you will retire? Usually, many retire between 55 and 70 years of age.
  • Life Expectancy: What is your life expectancy? In India, the normal life expectancy is usually around 75 years.
  • Monthly Income Required in Retirement Years: How much do you need after you retire? Calculate based on your lifestyle. Add factors such as medical expenses, rent, etc.
  • Expected Inflation Rate: Add the inflation rate. In India, it’s around 6–7% per year.
  • Expected Return on Investment (ROI): How much ROI do you expect? It depends on the asset classes you invest in. You can divide this into pre-retirement and post-retirement returns. Usually, the risk appetite reduces after retiring. Because the capital invested is more important than the ROI. Also, the corpus lump sum becomes huge. So, a lower return rate offers good returns financially.
  • Existing Savings and Investments for Retirement: Disclose any current retirement savings or investments. The whole amount will compound until you retire. So, this affects your investment options. You may not need to invest much to build a retirement fund.

Avenues to Invest in Building Retirement Corpus

We hope that you understand how a retirement calculator works. But you also need to know how asset classes help and work. This overall approach aids you in creating a retirement corpus. Stay disciplined in saving and investing. This is the only way to be financially independent during your retirement years. There are many options for asset classes. Some are stocks, MFs, NPS, and bonds.

Do you have a less risky appetite? Then, invest in mutual funds or the National Pension Scheme (NPS). These help you grow your portfolio with less risk. Use the NPS or mutual fund calculator now. This helps you determine the return. The NPS calculator is like a retirement calculator. It has a lot of input fields. So, fill them in first. It calculates and gives you proper results in a moment. 

To summarise

You need to make and follow your retirement plan. Only then can you live a happy retirement life. Use utility tools, like the retirement calculatorNPS calculator, etc., to plan. Also, don’t forget to consider insurance. Life and medical insurances are something to check for. These would help you a lot. It adds to the corpus and secures your dependents. Before making a decision, research various policies. Start taking these small steps. 

Follow the right direction towards a carefree retirement with Piramal Finance.