Retirement Calculator: Evaluate and Invest

retirement calculator is a tool for those who are eager to know about the corpus required post retirement to maintain a certain standard of living. Retirement calculator is considered as an essential element when Planning for retirement. It helps you to identify the estimated amount that you need to save for your retirement based on your current financial situations. Therefore, we take you through a very simple retirement calculator that will help you to evaluate the corpus needed when you retire.

Understanding Retirement Calculator

While using a retirement calculator, you would need to enter certain variables, such as-

• Your current age
• Your current monthly expenses
• Expected inflation rate (annual) for the years to come
• Long-term growth rate on investments

All these variables when fed into the calculator would end up giving the amount that you need to invest monthly for your retirement to maintain the standard of living. (i.e. your current monthly living expenses adjusted for inflation).

Retirement Calculator: Evaluation Process

1. Calculating your Current Monthly Expenses

The first thing that you need to do here is, calculate your monthly expenses like household expenses, utility expenses, transportation cost, and other lifestyle expenses. Other than this, you should have a rough idea about the minimum amount that you require monthly for miscellaneous expenses. The basic assumption here is that these expenses adjusted for inflation should suffice in the future to lead a comfortable post retired life.

*To illustrate- *

• Household expenses – INR 10,000
• Transportation expenses- INR 2,000
• Utility expenses-** INR 3,000**
• Other lifestyle expenses (movies, dining, etc.) - INR 3,000
• Miscellaneous expense- INR 2000

Total Monthly Expenses- INR 20,000

Open Retirement Calculator

2. Understand Inflation Rate for Coming Years

This is the average annual inflation rate that you expect in coming years till you retire. According to various market sources, the average inflation can be taken to be around 4-5% p.a. in the coming years. However, one can enter their own assumption also.

3. Long Term Growth Rate of Investments

This is long-term growth rate that you expect on your investments. Though the long-term return from the equity market has been 8-15% historically, according to market sources, going forward one can expect around 8-15% p.a. in the long run. If you have sound knowledge about the markets, you can enter your own assumptions on the growth rate.

4. Investment Evaluation

Now comes the interesting part where you get the desired amount that you need to invest monthly. Taking the above variables into consideration, you will get the desired corpus that you need to save monthly till you get retired. Here the estimated age for retirement is considered as 60 years (refer to the image below).

5. Total Corpus

By this, we mean how much corpus will be accumulated when you invest for 36 years, meaning if you start Investing at the age of 24 till 60 years of age. To reach the desired corpus, you need to make a monthly investment. According to the aforementioned figures, the total investment required every month is INR 10,143 for 36 years. As indicated, the estimated total corpus will depend on your current age, current monthly expenses, inflation and the growth rate on investment expected over the years.

Use Retirement Calculator

Conclusion- People who are planning for their retirement can use this calculator, through which you can easily estimate your retirement corpus. It will help you calculate approximately the amount needed for retirement and hence, you can plan your investment accordingly!

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