Retirement Calculator
Retirement Calculator is an online tool which will help you to calculate your retirement corpus. Further, you can use this Retirement Calculator to find out the future value of your current expenses.
If you wish to live a better lifestyle of what you are living you need to know the necessary retirement funds needed.
Retirement calculator helps you understand how much you need to grow your wealth before you retire and plan for it accordingly.
Find out how much you need to save by your targeted retirement date for easy and hassle free sunset years of your life.
This retirement calculator requires some basic inputs from your side such as your retirement age, life expectancy, inflation, expected return on investments, your current portfolio size and expected retirement expenses.
PersonalFN Retirement Calculator is one of the most valuable online tool. It will help you to draw a map for your financial plan under few assumptions. These assumptions are then converted into the projections. You can take into consideration your future source of income, inflation, growth rate of investments (pre and post-retirement) and so on.
It generates a result whereby you will be highlighted how much you need to save each month to ensure you have sufficient funds to live fulfilling retired life.
Now that you know the amount you would need for retirement, let’s see the important reasons for retirement planning.
Why Should You Plan for Your Retirement?
Did you know that from the very first day you receive money, not at your job, but the pocket money you received as a child, you have been an 'investor'?
Think back to the first day you received pocket money.
You most likely spent it on food, toys, games, movies and other entertainment, and travel.
How much of it did you save?
Not much, if you were like most children in school and college.
You invested in instant gratification, as do most youngsters.
From this young age, your activities, your spending patterns, formed a habit. Your investment behaviour started to get set. Your investor psychology began to solidify.
Then you got your first job and started to mingle in the workplace.
At work, you interact with your colleagues, slowly you hear about people making investments in Tax saving mutual funds, or in their PPF. Your HR talks to you about EPF so you know about that too.
You glean investment facts haphazardly from your colleagues and without really verifying the data, make further investment decisions.
For the next few years, your focus is mainly on saving tax and then you start to think about your life goals. You get married, then have children, educate your children, somewhere along the line you buy a home by taking a home loan.
The expenses continue, and your saving, spending, or investing continues as it did earlier. Your investments receive just enough of your attention for you to feel like you're doing something useful about it.
But are you doing enough?
With each well-intentioned step you take along this path, your biggest goal of them all suffers. Your Retirement.
The wealth that you could have built for this crucial goal, does not get built.
What we don't realize is that the success of all our life goals, from buying a car, to our children's educations, to going on a family world tour, to retiring young and retiring rich, depends on our investment behaviour.
What are the investor traits that affect your retirement corpus?
Investor Trait #1: Procrastination
Procrastinating is bad for your Retirement. You lose out on time value of money and power of compounding both.
Let's look at the cost of delay:
Mr. A is 25 and invests Rs. 5,000 per month. He is investing into equity mutual funds and will likely earn about 15% per annum over the next 25 years, until he turns 50.
Mr. B is 35, and invests Rs. 15,000 per month. He is also investing into equity mutual funds and expects the same rate of return for the remaining 15 years, until he turns 50.
Mr. A achieves a corpus of Rs. 1.62 crores.
Mr. B achieves a corpus of Rs. 1 crore.
The solution is simple. You want to be an investor as early as possible, even if the amount is small. You must save, invest, and save some more and invest some more, and in doing so, you will build up your wealth.
Investor Trait #2: Overconfidence & Ignorance
Don't underestimate inflation.
Don't underestimate the benefit of saving taxes.
Don't overestimate your ability to deal with financial goals 'later'.
Don't overestimate your health, as you get older, it will get weaker.
These things might seem unrelated, but they all point towards one quality - your confidence, or overconfidence, as the case may be.
Inflation will erode the real value of your wealth.
Dealing with a financial goal now is easier than dealing with it later.
Saving taxes will add to your retirement corpus in significant ways.
Your health will flag as you age.
If you knew how much you need to retire, you would probably start planning and investing for it right away. You will suddenly realize the importance of dealing with goals immediately, saving taxes, and also of being adequately insured.
Investor Trait #3: Constant Tracking & Monitoring
Once you realize that you need to invest, and you identify the right amounts, the right schemes, the right asset allocation, and begin your investments, the one thing you must NOT do, is track your investments every day, or every week, or every fortnight.
If you track your investments on a daily basis, your emotions will go on the same ride as the markets - up one day and down the next. Human beings aren't built to handle this kind of emotional volatility. So invest in the right schemes, for the right amounts, for a particular goal, and monitor once a quarter or once in 6 months. If markets are crashing - excellent! Buy more - it's cheaper now! Don't follow the herd - eventually it might run off a cliff.
Investor Trait #4: Investing Alone instead of as a Family
No man is an island. We all have families, and our financial decisions will affect them. The best way to go about building a retirement plan is to first sit down with your spouse and figure out exactly what you're spending now - you have to consider household expense inflation, medical expenses inflation, travel expense inflation, and the kind of lifestyle you want to maintain in your retired years. Will you do more charity work after you retire? Will you travel more? Will you both take up hobbies?
Together, you both should sit down with your financial planner and work out your retirement plan.
The habits you built as a child dealing with your money can be modified, tweaked and bettered. You can, right now, stop procrastinating, realize the cost of delay, and start planning for your retirement. After all, who doesn't want to retire young and retire rich?
Since you know the significance of retirement planning and have known the utility of the retirement calculator, learn step by step process of your retirement plan
4 Steps of Retirement Planning
The corpus that you build for your retirement depends on 2 broad factors:
- the choices you make, and
- the behavior of the financial markets.
We have no control over the behavior of the financial markets, so let's leave that one aside.
Consider the first. Can you imagine what your retirement life would be like if all the choices you made were absolutely perfect? If you didn't make a single retirement planning mistake, if every time you invested, it was according to plan, in the right asset class, in the right instrument, in the right option and at the right time? Wouldn't life be grand?
In the spirit of achieving that investing perfection, let's educate ourselves on What We Need to Do. Let's get started.
Step #1: Have a Retirement Plan
At PersonalFN, we have seen our clients go through incredible growth phases - not growth of the financial markets, but phases of personal financial growth.
When clients come to us, the state of their investments ranges from the slightly unstructured to the completely messy. If you don't know where your money is, you won't know what it's doing. Our clients often come to us slightly confused, not having articulated their financial goals, and looking for financial help.
By the time their Retirement Plans are created and finalized, they have a new sense of empowerment and discipline, clarity on their financial life, and a solid plan that they can follow. So you see, the personal financial growth is incredible.
To familiarize you with our process, we will walk you through a few things and also help you find out how much of a corpus you need to build to retire in peace.
Remember, you are earning and investing now, so that you build up enough funds to cover all your expenses for your entire retired life, so give your retirement plan the attention and importance it deserves.
Step #2: Diversify & Rebalance Your Assets
Don't make the mistake of thinking that it's all about equity / property.
You must have a proportion of your wealth in different asset classes such as debt and gold.
There's a thumb rule you can follow to know how much equity you should have, and it's got nothing to do with your age.
It's got everything to do with your investment time horizon.
If your retirement goal is less than 3 years away, you need to be in debt / fixed income products. This is not the time for equity.
If your retirement goal is between 3 and 5 years away, you can have part equity exposure, up to 45%, with 15% in gold, and 40% in debt / fixed income.
If your retirement goal is more than 5 to 7 years away, you can have anywhere between 45% to 60% in equity, with 15% in gold and the rest in debt.
If your retirement goal is 7-10 years away or more, you can opt for 75% in equity, 15% in gold and 10% in debt.
If you follow this, you will never face the panic that equity investors faced when the market crashed (thanks to Lehman Brothers) in 2008.
That's not all. You also need to keep track of how and when to rebalance your funds.
Remember that as your retirement goal time horizon changes, your asset allocation must change. In your Retirement Plan, your investments need to be rebalanced to reflect the right asset allocation for the goal's reducing time horizon.
Asset Allocation is important for any life goal that you want to achieve.
More on asset allocation for your Retirement Portfolio:
Step #3: Save Now, Spend Later
It's true.
The more you invest today, the more (much more) you'll have in hand when you are 60.
The numbers are straightforward: If you invest Rs. 10,000 per month for 10 years, you will build a corpus of Rs. 27.50 lakhs at a growth rate of 15% per annum. Increase this to Rs. 12,000 per month, for the same time period i.e. 10 years, and you'll build a corpus of Rs. 33 lakhs. Increase this to Rs. 14,000 per month, and you've got Rs. 38.50 lakhs.
So, get a grip on your spending, save more, invest more, and retire earlier and richer.
But be sure to invest in the right places and under professional guidance.
Step #4: Don't spend more than you have to on the taxman
Paying taxes can sometimes leave you with a 'what a waste of money' feeling. In order to avoid this feeling, and also to save and invest more money, go through the following little tips:
Make the most of all your deductions. Save medical bills in a shoebox throughout the year and claim Rs. 15,000 worth of deductions.
Buy medical insurance (for the medical insurance) and claim the deduction on the premium.
Buy a small second apartment if you can by taking a home loan, and claim the benefit of principal and interest repayment.
If you live in a rented apartment, see if you can restructure your salary to claim the maximum HRA possible.
Invest in PPF and don't withdraw from it until you retire.
I Understand The Retirement Planning Steps! Now, How Should I Proceed?
You now know that you need to have a plan in mind, diversify and rebalance your assets, save and invest, and save taxes. Your next step now that you know how your Retirement Plan should be broadly structured is a specific step.
Once again, let us urge you to not delay your retirement planning!
Retirement is a crucial financial goal of one’s life. Hence, involve your family because the financial decisions you take are going to have a far-reaching impact on your family. Sit down with your spouse, your children…and discuss what you have in mind.
The earlier you start, the easier it will be, and the more of a corpus you will build!
If you need any personal assistance you can reach out to us at :
To learn in detail about Retirement Planning, do read our free Retirement Planning Guide
Watch this video to learn how to create your retirement corpus: