Monthly Income Calculations: What should be your SIP and lump sum investments to get Rs 50,000 a month at retirement if your age is 25, 33, or 40 years?
Monthly Income Calculations: Value of money changes with inflation. Due to its impact, the same thing can cost higher a few months of a year later. So, calculations of future earnings should be based on inflation.
Monthly Income Calculations: A thing that costs Rs 1,000 today may cost Rs 1,060 1 year from now if we take 6 per cent as the standard inflation rate. How much will it cost 10 years or 20 years later? Certainly much more than Rs 1,060. How much? An estimated Rs 1,791 in 10 years, and an estimated Rs 3,207 in 20 years. So more than 3 times in 2 decades. Similarly, if you are 30 years old and your monthly expenses are Rs 50,000 today, will it be the same 10 years down the line or 20 years later? No! So when we calculate future earnings or retirement corpus requirements, considering inflation is an important factor. Based on inflation-adjusted estimates, know what your monthly SIP investment can be to get an inflation-adjusted Rs 50,000 monthly amount at 60 years of age if your current age is 25 years, 33 years, or 40 years.
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How inflation is calculated?
The standard inflation rate as per the Reserve Bank of India's (RBI) estimates is 6 per cent. The same can be considered for future calculations.
What will we calculate in our story?
We will take a 6 per cent inflation rate. Pre-retirement investment SIP and lump sum annualised return will be 12 per cent and post-retirement annualised return on the accumulated corpus will be 6 per cent. We will calculate the monthly SIP investment and lump sum investment.
How much does a 25-year-old require at retirement?
If they require Rs 50,000 now. At a 6 per cent inflation rate, they require Rs 3,84,000 a month at retirement, or Rs 46,08,000 a year, 35 years later. If post retirement return is 6 per cent, the 25-year-old needs a retirement corpus of Rs 7,68,00,000.
What should be monthly SIP investment to achieve that target?
The estimated monthly SIP investment to achieve that target should be Rs 11,820.
What should be lump investment to achieve it?
The estimated lump sum amount to achieve this retirement corpus is Rs 14,54,556.
How much 33-year-old require at retirement?
If they require Rs 50,000 now. At a 6 per cent inflation rate, a 33-year-old requires Rs 2,41,000 a month at retirement, or Rs 28,92,000 a year 27 years later. If post retirement return is 6 per cent, the 33-year-old needs a corpus of Rs 4,82,00,000 at retirement.
What should be monthly SIP investment to achieve that goal?
The estimated monthly SIP investment to achieve that target should be Rs 19,780.
What should be lump corpus investment to achieve this goal?
The estimated lump sum amount to achieve this retirement corpus should be Rs 22,60,271.
How much 40-year-old require at retirement?
If they require Rs 50,000 now. At a 6 per cent inflation rate, a 40-year-old requires Rs 1,60,000 a month at retirement, or Rs 19,20,000 a year at the age of 60. If post-retirement return is 6 per cent, the 40-year-old needs a Rs 3,20,00,000 retirement corpus.
What should be monthly SIP investment to achieve it?
The estimated monthly SIP investment to achieve that target should be Rs 32,030.
What should be lump investment to achieve retirement goal?
The estimated lump sum amount to achieve this retirement corpus is Rs 33,17,337.
Disclaimer
This is not investment advice. Do your own due diligence or consult an expert for financial planning.