Retirement Planning: Age 32, monthly expenses Rs 35,000; retirement age 60, what can be your retirement corpus and SIP monthly investment to achieve that?
Retirement Calculator: Retirement planning for everyone is important, and equally important is to start it early. If one delays it for some years, they lose a significant edge over someone who starts it early.
Retirement Corpus Calculator; SIP investment: Retirement planning is important, but how much retirement corpus is enough for you? Or, will the 'enough' retirement corpus you are targeting help you meet all your retirement needs? Without a financial planner, it may be a difficult task for everyone to gauge the right retirement corpus. For now, let's make your job easy. Some of the expenses for a person's retirement goal can be monthly expenses; goals such as child education and their marriage, insurance policy premiums, travel plans, and money can suffice them for the rest of their life. This corpus should exclude income tax that an investor will pay on this corpus.
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(Disclaimer: This is not investment advice. Do your own due diligence or consult an expert for retirement planning.)
Other factors to consider for retirement planning
Inflation is an important factor in calculating the retirement corpus. Your retirement may be 20, 25, or 35 years from now. You need to calculate corpus keeping a 6 per cent annual inflation rate every year.
Will expenditure be the same post retirement?
Some of the expenditures, such as lifestyle and office-related expenditures, are likely to reduce, but others, like insurance premiums and health-related, can increase.
How to calculate retirement corpus
Some of the factors that are considered important to calculate the retirement corpus are current age, retirement age, life expectancy, accumulated corpus, inflation, and rate of return pre-retirement and post-retirement.
What is retirement age?
The retirement age is not fixed. Any age when one can achieve financial freedom can be considered the retirement age. Financial freedom here refers to a stage where a person can run their expenses from passive income through their investments or other income sources.
Retirement corpus calculation
For our retirement corpus calculation, we will take the example of a 32-year-old person with Rs 35,000 monthly expenditure. They are expecting retirement at the age of 60, and the life expectancy is 75 years.
Is there any accumulated corpus?
The investor has an accumulated corpus of Rs 500,000.
Rates of return
The annualised rate of return from the investment for retirement will be 11 per cent. The rate of return from post retirement corpus is 6 per cent. We will calculate the retirement corpus and monthly SIP investment to achieve that goal.
What will be retirement corpus?
The estimated retirement corpus required to afford the same lifestyle will be Rs 2,89,69,927. The total investment till the age of 60 will be Rs 32,33,699.
What will be monthly expenditure at retirement?
The estimated monthly expenditure at retirement will be Rs 1,78,909.
What will be monthly SIP investment to achieve this target?
The estimated monthly SIP target to achieve this goal will be Rs 9,624.