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Pension Plan Calculator

Pension Plan Calculator

Retirement is the second last financial goal in your life, but the most important one in your life. Pension, on the other hand, is the last milestone of this very important financial goal in your life. Buying the best retirement and pension plan will ensure a stress-free life during your golden years.

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Pension Plan Calculator

Pension Plan Calculator

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What is a Pension Calculator

What is a Pension Calculator?

Pension is also called an annuity, and annuity refers to the regular sum received from an investment. Thus pension plans are also annuity plans. The pension calculator lets you estimate the amount of pension you can draw out of a pension plan or the amount you must invest to draw the expected pension annuity.

But the pension amount depends on the collected retirement funds through regular long-term savings. Therefore, your expected pension amount should decide the money you will save every month throughout your earning years.

A pension calculator helps you simplify your financial calculation so that you can focus on actionable results. Canara HSBC Oriental Bank of Commerce Life Insurance pension calculator is a free to use online tool which helps you plan your retirement more effectively.

How Does Pension Calculator Work?

You can follow the following simple steps to use the calculator to find out the amount that you need during your retirement years:

  • 1Enter your current age, and expected retirement age
  • 2Enter the current monthly saving amount and any lump sum investment amount
  • 3Select a growth rate for the ongoing investments
  • 4Select the number of years you will need the pension for (10 years, 20 years or Lifetime)
  • 5Do you want the pension amount to increase every year to provide for inflation?
  • 6Calculate the pension amount you can expect under the chosen options

Savings Vs Pension

The higher amount you save every month during your investment years, the bigger your retirement corpus will be. Thus, you can expect a higher pension amount during retirement years. Remember, you need to plan your retirement corpus as per your current needs and expenses. Also, while calculating the retirement corpus, you need to consider inflation and future expenses including emergencies so that you are well prepared for the uncertainties of life.

Retired Life vs Pension Amount

The longer your retired life will be the lower amount of pension you can expect out of your retirement corpus. As the same amount of corpus must last longer, your regular withdrawal amount automatically reduces. If you want to spend a lavish life after retirement, you will need to put more investments into your retirement and pension plan. As you age, you become more susceptible to diseases. Build a retirement corpus that can efficiently help you manage your medical expenses during retirement.

Inflation-Adjusted Pension

An inflation-adjusted pension means that your annual withdrawal will keep increasing to adjust for inflation. However, to ensure the longevity of your retirement corpus, you should balance your withdrawals in such a way that your initial withdrawals are smaller. While calculating your retirement corpus, you must consider inflation as the buying power of money slumps with time. The cost of healthcare may rise when you retire, or cost of food may also increase in the future. If you do not consider inflation while calculating your retirement corpus, you may have an inadequate fund, which will not be beneficial.

How Much to Save for Retirement?

This question leads many financial experts to draw very complicated and often scary pictures of your retirement plan. However, there is a simpler method you can follow to quickly get into action. Here quick start is important, as every additional year counts dearly.

For example, imagine you start to save Rs. 3000 p.m. now when you are 30 years of age vs a year later. If you start now, you will have about Rs 3.5 Lakhs more into your retirement kitty if your investment grows at 8% p.a.

Thus, any estimate you have should enable you to start saving towards retirement. The simplest method is the percentage of income method. This method simply rules out all the complicated assumptions and gives you a simple formula to continue your retirement saving for a long time.

10 – 15% of Your Income

As per this method, you can replace the monthly income you have at 30 years of age, by the time you reach 60. All you need to do is save 10 – 15% of your monthly income towards retirement.

If your investments can grow at 8% p.a. after tax, you will have enough money to draw an inflation-adjusted pension after you retire. The provided inflation rate remains equal to or below the income growth rate you had before retirement.

Thus, building an adequate retirement corpus is not rocket science. Instead, you simply need to continue increasing your regular investments as your income grows. This pension calculator will help you estimate the current status of your retirement funds, and whether it will provide sufficient pension to you later.

FAQs

How much money do you need to retire comfortably?

It depends on a variety of factors such as your lifestyle, habits, financial goals, income and expenses. Saving 70-80% of your pre-retirement income will help you lead a comfortable retirement life. You should have enough money to support your current lifestyle when you retire.

Is saving Rs.80,000 a year enough for retirement?

If your save Rs.80,000 a year for 25 years, you will save Rs. 20 Lakhs for your retirement. Now, consider all the expenses that you need to take care of and estimate whether the retirement fund you've built will support your expenses. If your lifestyle expenses are on a higher side, you must save a bit more to continue that same lifestyle even when you retire.

How can I buy the best pension plan?

Estimate your retirement corpus as per your current income and expenses. Define your financial goals and investment capability. Search for a pension plan that offers you flexibility. Pension4Life plan is a life insurance cum pension plan that offers you life insurance cover along with giving you a guaranteed income stream as per your post retirement needs.

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