Retirement Calculator: Monthly expenses Rs 50,000, current age 40 years; know your retirement corpus and SIP and lump sum investments to achieve that goal
Retirement Calculator: Retirement planning is important. The early one starts it, the better it is. But one needs to calculate their retirement corpus amount and plan their investments according to that.
Retirement Calculator: If you are 25, 35, 40 years old, or of any age, you need to plan your retirement. For that, you need to know your retirement corpus and the amount that you need to invest every month or lump sum to achieve that financial goal. Monthly expenses at the time of retirement, life expectancy, and the inflation rate are also the factors that need to be taken into account when calculating the retirement corpus.
Photos: Unsplash/Pixabay
(Disclaimer: This is not investment advice. Do your own due diligence or consult an expert for financial planning.)
What should a retirement corpus be
When we calculate the retirement corpus, we take our present expenses as the parameter. We assume to retain the same lifestyle at retirement. There are chances that some lifestyle and travel-related expenses may reduce post-retirement. But if someone wants to upgrade their lifestyle at retirement, they need to calculate the corpus keeping those changes in life.
What is retirement age?
There is no specific retirement age. It is the age when you want to see yourself financially free. For someone, it can be 45; for others, it can be 55; for you, it can be something else.
Why is inflation a factor?
It is because things are likely to be costlier in the future. If you buy something for Rs 100, it is most likely to cost much more 15 years later. The same thing will apply for the retirement corpus also. One may take 6 per cent as the inflation rate and calculate the corpus according to that.
Post-tax returns
When we are calculating the retirement corpus, we need to keep taxation in mind. Tax rules will keep changing, so one needs to keep revising their retirement corpus strategy.
Retirement corpus calculation
We are calculating the retirement corpus as per these conditions:
Present age- 40 years
Retirement age- 60 years
Life expectancy- 75 years
Present monthly expenses- Rs 50,000
Inflation rate- 6 per cent
Expected return from investments during working years- 12 per cent annualised
Expected rate of return during retired life- 6 per cent
Current savings for the retirement phase- Rs 5,00,000
What will be your monthly expenses at 60?
The estimated monthly expenses at 60 will be Rs 1,60,357. (Expenses will increase by 6 per cent annually)
Future value of your current investments of Rs 5 lakh?
At 12 per cent growth, a Rs 5,00,000 amount will increase to estimated Rs 48,23,147.
Future corpus amount needed to meet expenses
Corpus you required at retirement-future value of your current investments= Rs 2,88,64,260-Rs 48,23,147= Rs 2,40,41,113
Number of years you need to invest
Number of years you need to invest
Lumpsum amount you need to invest
The lump sum investment needed to meet your retirement requirements will be Rs 24,92,265.
Monthly SIP amount required to meet retirement corpus needs
The estimated monthly SIP investment to achieve that goal will be Rs 24,062.