Retirement Calculator

Many aspire to retire comfortably, and with the right financial strategies, that is possible. Successful retirement planning involves a combination of fiscal discipline and investment prudence. One indispensable tool in this journey is a reliable retirement calculator. The calculator helps investors estimate the retirement fund they need to retire comfortably and the money they should start saving now.

Retirement planning is a financial exercise that helps investors determine their needs for a post-retirement pension, retirement corpus, and current monthly savings for a comfortable retirement. It helps individuals save for their future lives and easily and independently meet their goals and dreams.

The process of retirement planning involves:

• Setting retirement goals.
• Estimating the amount they will need.
• Making a thoughtful investment to grow your retirement savings

In simple terms, retirement planning involves formulating financial strategies to save, spend, and invest in alignment with long-term goals during the later stages of life. Various financial instruments are accessible to support retirement planning, catering to each individual's unique profile.

A retirement corpus is a financial reserve representing the money required at retirement. It serves as the foundation for a pension to sustain an individual during retirement. Given the absence of external income sources post-retirement, the reliance on this accumulated corpus becomes paramount for financial well-being.

The process of building a retirement corpus unfolds during one's employment years, involving strategic investments in retirement plans like:

• Unit Linked Insurance Plans (ULIPs)
• Public Provident Funds (PPF)
• Employee Provident Funds (EPF)
• National Pension Scheme (NPS) and other similar instruments

Through these avenues, individuals aim to secure a substantial corpus that not only meets their basic needs but also allows for a financially stable retirement. The careful and informed allocation of resources into these diverse retirement plans ensures the growth and sustainability of the corpus, serving as a financial safety net for the retired phase of life.

Investing in a retirement plan is a prudent financial decision that offers various benefits to individuals preparing for their future.

• It offers an organised and structured approach to saving, guaranteeing that people regularly set aside money for their later years. It, therefore, helps maintain a desired lifestyle post-employment.
• Retirement plans often have tax advantages, allowing individuals to optimise their tax liabilities.
• Investing in a retirement plan early and consistently contributes to the compounding effect, potentially leading to substantial growth in the overall value of the retirement fund. This strategy enables individuals to achieve their financial goals more effectively.
• It offers a range of investment options, allowing individuals to customise their portfolios based on their risk tolerance and financial objectives.
• A well-structured retirement plan provides financial security and peace of mind during post-employment.

A retirement calculator is an online utility tool that helps investors calculate the amount of money they need after retirement. It helps them plan their investments to get the desired retirement corpus. This tool takes into consideration numerous factors, such as:

• Personal details
• Income
• Investment
• Expenses

Thus, the calculator helps investors perform complex retirement planning calculations in just a few clicks. The retirement planning calculator helps them plan the following two stages of their retirement goal:

1. Accumulation Stage: Individuals save and invest money in this stage to build a large corpus before retirement.
2. Distribution Stage: A retirement plan calculator helps build a regular income stream from the corpus built in the accumulation stage.

Thus, retirement calculators play a crucial role in financial planning, offering individuals insights into how their current savings and investment strategies align with their retirement aspirations.

A retirement plan calculator assesses various financial inputs like current age, expected retirement age, expenses, etc. It helps users to generate projections and insights into their future financial situation during retirement. The calculator will then provide the details regarding the following:

• Adequacy of current retirement savings
• Retirement corpus amount required to replace expenses post-retirement
• Amount to be saved each month to achieve targeted retirement corpus

For instance, investors' current age is 40, and they want to retire at 65 and need ₹35,000 each month post-retirement.  To build a retirement corpus, they invest in FD, which offers an 8% return. (Assume inflation rate = 6%)

According to the formula,

Where, FV = Future Value

PV = Present value

r = Expected inflation at 6%

n = Time of retirement (65-40)=25

Thus, putting the values into the formula:

FV = 35,000 (1+0.06)^25 = ₹1,50,215.5

By multiplying the monthly amount by 12, investors get a yearly figure: ₹150215.5 * 12 = ₹18,02,586.

So, as soon as they retire, they will need an annual income of ₹18,02,586.

A retirement plan calculator should help investors determine the amount of money they need to start saving to achieve their retirement goals. If they wish to maintain this lifestyle post-retirement as well, the calculator will help in determining:

1. The ideal retirement corpus
2. A monthly saving amount that needs to be  invested to achieve this corpus

Thus, a calculator for retirement planning can help you define your retirement goal and devise a plan to achieve it. It helps investors define their retirement goals considering the age at which they wish to retire and their present retirement assets.

The calculator can also be used to assess if the present retirement investments are on track to fulfilling dreams. If not, the calculator will give an amount to be invested monthly to fill the gap.

Canara HSBC Life Insurance retirement plan calculator is an easy-to-use online tool that helps individuals with the following:

• Saves time with complex financial calculations and deciding on retirement investments
• Estimate the monthly pension they will need at the time of retirement
• Estimate the retirement corpus needed to sustain the post-retirement pension needs
• Calculate the monthly savings amount to meet the retirement goal
• Provide a comparative picture of different retirement investment plans
• Save for big post-retirement financial goals

With the few easy and hassle-free steps mentioned below, one can easily calculate their required retirement income:

1. Current & Retirement Age: You need to put your current and desired retirement age. This helps determine the investment period for building a retirement corpus.

   For example - If you are 30 and hope to retire by 60, you have 30 years to build your retirement corpus.

2. Current Monthly Expenses: Mention precise current monthly expenses. This expense should be the amount one expects to continue post-retirement. The amount will be inflated until retirement to estimate monthly pension needs.

   For example - If the present survival and lifestyle expense with the spouse is ₹40,000, then 30 years later, at retirement, this can grow to more than ₹1.5 lakhs at 5% p.a. inflation.

3. Current Savings for Retirement: The investor needs to add the current value of their retirement investments and select a growth rate for the investment. This is the amount they have already parked for your retirement. This amount will grow and add to the retirement corpus needed if not withdrawn.

4. Press 'Calculate' and check the following values:

   • Monthly Expense Post Retirement: This is the real value of the monthly living cost adjusted for inflation. The calculator for retirement planning assumes an annual inflation rate of 5% p.a.
   • Retirement Corpus Required: This is how much money an investor must have before they retire. This online calculator assumes post-retirement inflation at 5% p.a. and investment growth rate at 6% p.a.
   • Amount Required to Invest Monthly: This is the money that they must save every month and invest towards their retirement goal.

5. Select the plan: Select a retirement plan to start an investment or leave the contact information to receive a call from an expert advisor.
   

   The online retirement calculator from Canara HSBC Life Insurance helps investors plan retirement and chalk out their investment gaps. Use the calculator to save adequately for post-retirement income needs.

Illustration:

Canara HSBC Life Insurance retirement calculator India uses raw information relevant to retirement planning to estimate your financial needs related to retirement. The following example explains the step-by-step working:

Retirement is a pivotal life stage, demanding meticulous planning and financial assurance. The optimal savings for this period depends on diverse factors, including age, income, lifestyle, and specific financial aspirations.

When planning for retirement, one should consider that the expected living costs post-retirement might be a fraction of the current household expenses. In general terms, the monthly income at the age of 30 should ideally cover the expenses at the age of 60. However, income and expenses are subject to increase over time due to inflation. The actual lifestyle expense may surpass or fall below expectations, but it ultimately depends on income growth.

Understand why you should consider inflation when planning retirement.