Retirement Calculations: Age 30, monthly expenditure Rs 30,000, Rs 35,000, or Rs 40,000? Know your retirement corpus and SIP & lump sum investments to achieve it
Retirement Corpus Calculations: To have an idea about your retirement corpus, 3 important factors are your current monthly expenditure, years to your retirement, and the age till when you need your retirement corpus. You also need to know lump sum and monthly SIP investments to achieve it.
Retirement Corpus Calculations: How much do you need for retirement? This is a question that most of us don't know. However, one can always calculate their estimated corpus and how, through investment planning, they can reach their retirement corpus goal. Having a retirement corpus that can help you meet your expenses post retirement provides you financial freedom. Know how we can calculate it; what will be the retirement corpus for 30-year-olds whose monthly expenditures are Rs 30,000, Rs 35,000, or Rs 40,000, respectively; and what can be their lump sum and monthly SIP investments to achieve that goal?
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(Disclaimer: This is not investment advice. Do your own due diligence or consult an expert for financial planning.)
How you can determine your retirement corpus
You need to know your current monthly expenditure. Then make an assessment of inflation-adjusted expenses at your retirement age, and how much do you need till your life expectancy?
What can life expectancy be?
This is one thing that we can't predict. But factors such as current age, health status, and family medical history can help make an assessment about life expectancy.
What will be inflation rate?
Inflation can be 6 per cent or 7 per cent. As per RBI's estimate, it can be 6 per cent for the long-term.
What will we calculate?
We will calculate the retirement corpus for 30-year-old persons who have monthly expenditures of Rs 30,000, Rs 35,000, or Rs 40,000, respectively. We take the retirement age as 60. We assume them to keep the same lifestyle at retirement as they have today.
What will be other factors?
We will take life expectancy as 75 years and 80 years. The inflation will be 6 per cent. It means their monthly expenditure will increase by 6 per cent every year post retirement. We also assume that they don't have any other retirement fund so far.
Also, since we are creating the retirement corpus, we also need to know the lump sum and SIP investments that we need to make.
Return on investments
We are expecting a 12 per cent post-tax annualised return on pre retirement investment and a 6 per cent annualised return on post-tax post-retirement investment.
Retirement corpus for person with Rs 30,000 monthly salary (at 75-year life expectancy)
The estimated monthly expenditure at 60 will be Rs 1,72,305, the estimated corpus will be Rs 3,10,14,900. The estimated lump sum investment to achieve that will be Rs 10,35,213, and the estimated monthly SIP investment will be Rs 8,786.
Retirement corpus for person with Rs 30,000 monthly salary (at 80-year life expectancy)
The estimated monthly expenditure at 60 will be Rs 1,72,305; the estimated corpus will be Rs 4,13,53,200.
Retirement corpus for person with Rs 30,000 monthly salary (at 80-year life expectancy)
The estimated lump sum investment to achieve that will be Rs 13,80,284, and the estimated monthly SIP investment will be Rs 11,715.
Retirement corpus for person with Rs 35,000 monthly salary (at 75-year life expectancy)
The estimated monthly expenditure at 60 will be Rs 2,01,022; the estimated corpus will be Rs 3,61,83,960.
Retirement corpus for person with Rs 35,000 monthly salary (at 75-year life expectancy)
The estimated lump sum investment to achieve that will be Rs 12,07,746, and the estimated monthly SIP investment will be Rs 10,251.
Retirement corpus for person with Rs 35,000 monthly salary (at 80-year life expectancy)
The estimated monthly expenditure at 60 will be Rs 2,01,022; the estimated corpus will be Rs 4,82,45,280. The estimated lump sum investment to achieve that will be Rs 16,10,328, and the estimated monthly SIP investment will be Rs 13,668.
Retirement corpus for person with Rs 40,000 monthly salary (at 75-year life expectancy)
The estimated monthly expenditure at 60 will be Rs 2,29,740; the estimated corpus will be Rs 4,13,53,200. The estimated lump sum investment to achieve that will be Rs 13,80,284, and the estimated monthly SIP investment will be Rs 11,715.
Retirement corpus for person with Rs 40,000 monthly salary (at 80-year life expectancy)
The estimated monthly expenditure at 60 will be Rs 2,29,740; the estimated corpus will be Rs 5,51,37,600. The estimated lump sum investment to achieve that will be Rs 18,40,379, and the estimated monthly SIP investment will be Rs 15,620.