Retirement Planning Calculator
You are young, and your zest for life is high. You are earning and are happy to be independent since it allows you to live up to the good things in life and indulge in lifestyle expenses. What if you would not need to keep working forever? What if you could accumulate enough funds for yourself to live a comfortable life post retirement, or even think of retiring early! Wouldn’t that be a blessing? Thankfully, it’s possible with the retirement calculator. Having a pool of money and an investment strategy that generates income post-retirement is vital for maintaining your standards of living even after retirement.
An Overview of Retirement Planning Calculator
Retirement Planning considers the expenses needed after you decide or have to stop working and retire. You might want to have an independent life and not have to rely upon a third person, be it your own children, for daily expenses after retirement. The smart thing to do financially would be to plan for a comfortable retirement. But the thing is the earlier your start, the better.
Retirement Planning Calculator (RPC), as the name suggests, is an insightful financial tool that allows you to calculate how much money you would need after retirement. Whether you want to retire peacefully and live a frugal life or want to live life king size and maybe travel the world, you must plan now to achieve your goals.
What Exactly is Retirement Planning?
Retirement Planning entails you carrying out the following steps:
- Calculate the amount you would need every month to lead a lifestyle of your choice after retirement. Here you need to factor in the inflation amount over the years. Also, it would be prudent to add an adequate amount towards medical expenses and contingencies as you age.
- The next step involves calculating the corpus that you would need at retirement to generate income to cover all these expenses. It would be wise to calculate returns on a realistic value rather than any outlandish figures.
- Once the required corpus target is set, you need to break the amount into a monthly contribution required during your earning years to achieve your goals.
A Deep Dive into the Working of a Retirement Planning Calculator
A Retirement Calculator in India works from two perspectives.
It first looks at the personal aspect of your life. It requires you to estimate the quality of life you wish to lead after retirement. The second aspect involves financial planning. The calculator breaks down the amount of money you need to invest throughout your earning years to build a meaningful corpus that will assist you after your retirement.
Retirement Calculator works on the following principles:
- It will give you insights into the corpus you need after retirement for your lifestyle.
- The Retirement Calculator will help you calculate how much you need to save every month to reaching your financial goals.
- Once you have determined the monthly savings amount, you need to decide on the right investment avenues. It would help if you figured out your investment strategy and narrowed down on investment choices. For enjoying a comfortable life post-retirement, you should research available market offerings and select ones with better projections and prospects of higher yet ensured rates of return on your investments.
How Much Should You Save for Retirement?
It is essential to tally up all expenses you will need during your retirement years. It is also necessary to consider and account for inflation over the years. Generally, it would be advisable to list all your expected expenses. It should include the following:
- Personal expenses for self and spouse
- Expenses for any dependents
- Utility bills
- House rent
- Driver/house help/cook salaries
- House maintenance
- Medical needs
- Expenses for hobbies or leisure activities
- Travelling costs
- Social and family responsibilities
Making a list prepares you for the amount you would need after retirement. Besides these recurring expenses, it would be advisable to list any high-value events you desire to accomplish after retirement and plan accordingly.
Plan Your Retirement with a Retirement Planning Calculator
For understanding the amount you will need upon retirement, you need to enter easily available details into the Retirement Planning Calculator.
A Retirement Planning Calculator then generates a customized plan targeted towards your financial goals. If you need to retire with confidence, start planning as soon as possible. The more time you get to plan and invest, the better would be the rewards. A Retirement Date Calculator helps in working out these details smartly for you.
How to Use a Retirement Planning Calculator Effectively?
As with all other online tools available nowadays, renowned for their ease of use, a Retirement Age Calculator is also straightforward to operate. The Jupiter Retirement Planning Calculator is easy to use and requires only a few following steps to follow:
- Enter your current monthly income
- Select your present age
- Select your expected retirement age
- Select your estimated life expectancy
- Select the expected return on the corpus
Once the data is fed, the algorithm will work out the corpus amount needed at retirement. The planner will also tell you the amount you need to invest regularly in your earning years to reach your target.
What are the Benefits of Using a Retirement Planning Calculator?
Using a retirement planning calculator can help you in many ways, some of which are as follows:
- It gives you a clear idea about the investments you need every month to reach your goals
- It shows you the corpus you might require at the time of retirement
- It helps you plan your finances throughout your earning life
- It offers you clarity and flexibility with your financial decisions
- It gives you an idea of the future value of estimated expenses, factoring in the inflation rate
- It is super easy and convenient to use
Details of Retirement Investment Plans
Try diversifying your investments for better risk management. Remember that all financial products come with some inherent risks. Also, market-related products have periodic cycles of ups and downs. A balanced investment portfolio helps in maintaining harmony in your investments. It will definitely help if you spread your investments across various asset classes. Typically, the investment plan should consider the following asset classes:
- Mutual Fund
- Gold and other commodities
- Real estate or REITs
While deciding on the allocation percentage to each asset class, the following factors play a crucial role:
- Expected returns on investment
- Risk involved
- Taxation for each investment
- Transaction costs involved
Since you can put most investment plans into action digitally, the ease of investing has increased manifold. The right plan with a proper asset allocation can be implemented seamlessly. Also, sticking to such plans for a longer duration becomes more manageable when the blueprint is already laid out.
Selecting the Best Retirement Plan
The financial markets have evolved dynamically over the years. Earlier, people planned investments based on the simple buy and hold strategy. But in the modern world, there are numerous choices available. Seems tricky? Here’s a simple example for you:
Let’s say your current monthly income is Rs. 25,000, and your present age is 25. Assuming you would like to retire at the age of 60 and your life expectancy is 80 years. You will require a corpus of ₹23,05,827 at the time of retirement and monthly savings of ₹8,636, taking a rate of return of 10%. Now, it is for you to decide the investment asset classes and allocation strategies. Since this is a very crucial decision to make, you must thoroughly understand the benefits of different asset classes and put your money in the ones you can be confident about.
Selecting the most suitable retirement plan is a process that requires research and understanding of the markets. After all, if you plan an important event like your retirement, you need to know all the factors involved!
In this article