Retirement Calculator

Retirement is a long-term and complex financial goal. Retirement planning helps you simplify the goal and start investing. It will also help you course-correct during your employed years to build an adequate retirement corpus. Adequate retirement corpus is necessary if you want to have a consistent lifestyle after retirement.

Retirement planning is an essential part of your financial health. In order to plan for a peaceful retirement, here are five major factors that you must take into account:

i. Retirement Corpus: Determine after retirement expenses to build a corpus that can keep up with the inflation as well as your lifestyle expenses.

ii. Understand your Risk Appetite: Before investing in any financial product or buying the best retirement plan, assess your risk appetite and invest accordingly.

iii. Clear the Debts: Try not to get into unnecessary debt and steer clear the debt mountain to have a financially independent retired life.

iv. Source of Income: You must have a regular and steady source of income when you retire as it will help you to manage your everyday expenses.

v. Tax Benefits: Look for retirement plans that offer tax benefits. Life insurance cum savings plan can be used for building retirement corpus and they offer tax benefits as well.

A retirement planning calculator is a free online tool to help you plan your retirement goal. Best retirement planning calculators help you understand your retirement financial needs and create an investment plan to meet the desired goal.

Pension is the regular sum you receive from your retirement savings plans after you retire. The investment plans which provide pensions are also called annuity plans. These plans allow you to invest a large sum of money for a long period and draw a regular sum as a pension. Pension replaces your income from employment after your retirement.

Your pension will depend on the retirement corpus you have built up to the point of retirement. Retirement age, life expectancy and pension plan benefits also play a role but are not as significant. You can use retirement calculators to estimate your pension need while you are trying to build the corpus.

You can use the online retirement calculator by Canara HSBC Life Insurance. The calculator only need details of your current expenses, your age, and the age you wish to retire at. Once you fill in this information, you can estimate the amount you will need to retire comfortably.

Use online retirement calculators to estimate the adequate retirement corpus for your needs. These calculators are free to use and help you determine the corpus need based on your present monthly expenses and age.

The best retirement plans in India include National Pension Scheme (NPS), Public Provident Fund (PPF), ULIP, and endowment plans are some of the best available retirement plans in India. Canara HSBC Life Insurance offers ULIP plans like Invest 4G, Smart Lifelong Plan and endowment plans like Secure Bhavishya Plan for retirement investment.

Retirement plans like Invest 4G, PPF, and NPS allow you to start investing any time before the age of 65. You can continue investing in these plans up to the age of 99. Thus, if you start investing in these plans by 30, you can build a strong corpus and draw a pension without reinvesting the corpus in a different plan.

Any amount which enables you to receive sufficient inflation-adjusted income, after you have retired until your demise is a good amount to retire with. For example, if you are 30 and expect your post-retirement expenses to be Rs. 25,000 in today’s terms when you are 60, you will need about Rs. 1 lakh p.m. in real terms.

To generate such inflation-adjusted income for about 30 years after your formal retirement, you will need a corpus of about Rs. 2.3 crores.

The amount you will need to retire is unique to your lifestyle, age, and financial needs. You can use the Canara HSBC Life Insurance simple online retirement calculator to assess your retirement needs. The online calculator helps you estimate your retirement funds based on your present monthly expenses, age and expected retirement age.

The earlier you wish to retire the higher the retirement corpus you will need. This is because your post-retirement period extends by a few years. Thus, your corpus has to provide for a longer period than earlier. Also, your monthly savings must be much higher to achieve this corpus as you have less time for growing the invested money.

It depends on your current age, saving capacity and investment options. If you are 30 years of age, you will need to start saving anywhere between Rs 20,000 and Rs 25,000 per month to achieve your goal. Also, your annual savings must increase as your income does. Generally, a 5% p.a. growth in your investment amount will comfortably take you to the desired goal.

Ideally, you should aim to recreate your income which is a little more than enough to take care of your regular financial needs post-retirement. In India, the amount could vary depending on your financial condition, place of residence and lifestyle. In todays’ terms for an urban setting Rs. 50,000 to 1 lakh should be good enough to have a post-retirement income. However, for semi-urban and rural settings even a lower amount would work.

If you want to receive Rs 6000 a month as a pension when you retire, this is probably not enough money for a comfortable retirement if you have just started earning. However, if you are 25 and want to start saving Rs 6000 a month towards your retirement, this could be a good amount to start with. But imagine getting Rs.6000 every month to live your life after 20-25 years, when the cost of goods would have increased due to inflation. The amount may not be sufficient to take care of your post-retirement expenses.

How long will a corpus last depend on two factors – the amount of regular withdrawal and the rate of return on the invested money. If your withdrawal is lower than the rate of interest earned on the invested money, your corpus can last forever. For example, if you can invest Rs 1 crore at 6% p.a. after tax, you can withdraw up to Rs. 6 lakhs without depleting your initial corpus. However, if you withdraw Rs 7 lakhs p.a. your corpus will last about 28 years.

Retirement is a long-term financial goal. Thus, in the early years, you can afford to take more risk on your investments and aim for better growth. However, after retirement even as an aggressive investor, you should avoid taking more risk than a AAA-rated corporate bond on your retirement kitty.

Thus, in the post-retirement period, your average rate of return would range between 6% to 8% p.a. depending on the market scenario.

When a person retires, they receive certain benefits from their employer. That retirement benefit is taxable. However, some of them are exempted from taxation. When you buy a retirement plan, you are eligible for tax deductions of up to Rs. 1.5 Lakhs under Section 80C of the Income Tax Act.

Pension plans allow you to withdraw your pension as a regular sum annually, quarterly or monthly. So, you can withdraw your pension in a lump sum a year in advance.

Inflation does not directly affect retirement savings. But high inflation means you will need more money to look after your expenses after you retire. Thus, you will also need a bigger retirement corpus. This ultimately boils down to your present retirement saving needs. For a larger corpus, you will need to save more.