Retirement Calculations: Age 36, expense Rs 40,000 a month? Know your required retirement corpus and SIP, lump sum investments to achieve it
Retirement Corpus Calculations: Financial freedom at every stage of your life is necessary. To have that at the retirement stage, it is necessary to know the required amount to live life independently.
Retirement Corpus Calculations: Retirement planning is necessary, but when you take the first step towards it, important things to know are your retirement age and the required retirement corpus to live a comfortable life. You need to make investments or generate other sources of income to build a retirement corpus. Adjusted with inflation, it should be enough to sustain you through your retirement life. In this write-up, know about the required investments to generate a retirement corpus for a 36-year-old, whose monthly expenses are Rs 40,000.
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(Disclaimer: This is not investment advice. Do your own due diligence or consult an expert for financial planning.)
What is retirement plan?
Everyone needs to know their retirement corpus. A retirement plan is a method to reach that target. This corpus can include a person's daily expenses, funds to achieve travel goals, hobbies, starting a business, etc.
What can one do to prepare retirement corpus?
One should assess how much inflation-adjusted amount they need at the retirement stage. Based on that, one can start investing monthly, lump sum, or in phases. To get the required post tax return, you need to keep revising your strategy.
What is an ideal retirement age?
There is no ideal or fixed retirement age. It's an age when an individual wants financial freedom. It can be different for different people.
Why is inflation a factor in calculating retirement corpus?
Expenses of an individual rise pre and post retirement. So, it is necessary to know the inflation-adjusted corpus one requires.
Calculation for story
We are calculating the retirement corpus for a 36-year-old person with Rs 40,000 monthly expenses. We will take 6 per cent as the inflation rate. It means the retirees expenses will rise by 6 per cent annually post retirement. We will calculate the retirement corpus, and lump sum and monthly SIP investment amount to achieve that goal.
What will be investment return?
Pre-retirement annualised investment return will be 12 per cent. Post-retirement investment return will be 6 per cent.
What will be retirement age and life expectancy?
The retirement age in this case will be 60 years, and the life expectancy will be 80 years.
36-year-old's expenses at retirement
At a 6 per cent inflation rate, the monthly expenses for a 36-year-old will rise to Rs 1,61,957.
How much corpus do they require?
The estimated retirement corpus that the 36-year-old requires is Rs 3,88,69,680.
Number of investment years
The person has 24 years to invest in lump sum, monthly SIP, or both.
What will be monthly SIP investment to achieve retirement corpus?
The estimated monthly SIP amount to achieve the retirement target will be Rs 23,238.
What will be lump sum investment to achieve retirement corpus goal?
The estimated lump sum amount required to achieve the retirement corpus will be Rs 25,60,817.