Retirement calculators are a web-based tool that helps in calculating and showing you your retirement corpus. It is preferable to begin planning and investing in the retirement funds required for a stress-free lifestyle after you’re retired. A retirement calculator will help you exactly figure out how much cash you need to save before retiring.
Personal and financial planning is required for retirement. Personal planning determines retirement satisfaction, whereas financial planning assists in budgeting income and expenses based on the personal plan.
Personal planning can be accomplished by answering a simple yet powerful question. How would you like to spend your retirement time? While financial planning can help estimate whether a person has enough retirement funds to achieve the type of retirement they desire. During retirement, the majority of income would come from government pensions, employment-related sources, or personal investments.
This is all easier said than done. As a result, a retirement fund calculator makes it simple for investors to calculate their retirement corpus and begin investing in it.
Key Takeaways
- Retirement planning calculators
- How a retirement calculator works
- Retirement date, age and gratuity calculators
- Retirement corpus calculator
Retirement Planning Calculators
Retirement planning calculators assist in determining how much money is required to ensure adequate retirement planning. Retirement planning calculators, on the other hand, require specific information to calculate the retirement corpus.
To project the expenses and duration of investments, basic information such as current age, retirement age, and life expectancy are required.
Monthly expenses such as your house rent (if applicable), utility bills, maid/cook/driver wages, car maintenance, fuel cost, leisure expenditure, medicines, and so on are also required by the calculator. It calculates your retirement corpus considering the future worth of these expenses. The calculator calculates the future value of the costs based on the inflation rate. Personal information such as marital status, dependents, city of residence, and habits are also taken into account when calculating the retirement corpus. These particulars aid in comprehending the family situation and designing an appropriate plan.
Current investments are also evaluated in order to determine how much more money needs to be invested in order to achieve financial independence during retirement.
A planning calculator calculates the retirement corpus based on the information provided above. It does not stop there; the calculator also recommends a suitable investment strategy to achieve your goal corpus over time.
How does a Retirement Planning Calculator Work
Retirement planning calculators will estimate how much money you will need in retirement. It will also compute the corpus, which will generate the retirement income you require.
Let’s look at a detailed example to see how the retirement planning calculator works. Assume you’ll need Rs 25,000 per month in retirement. Let’s say you are currently 25 years old and intend to retire at the age of 60. What is the retirement corpus you require if you invest your retirement savings in a bank FD with an 8 per cent yield? (Assume a 6% inflation rate.)
Use the retirement planning formula:
FV = PV (1+r)^n
Now,
>FV = Future Value.
>PV= Present Value
>r= expected inflation is at 6%
>n= time to retirement (60 years – 25 years) = 35 years.
FV = 25,000 (1+0.06)^35 = Rs 192,152.17
You can convert the monthly amount generated into a yearly figure instantly by multiplying it by 12
Rs 192,152.17 * 12 = Rs 2,305,826 is what you get
The annual income you will require immediately after retirement is Rs 2,305,826 .
Calculate the retirement corpus to make an annual income of Rs 2,305,826 at the beginning of the whole retirement period.
Income required in retirement = Rs 2,305,826
Retirement Period can be about 20 years
(Life Expectancy is of 80 years – Age of Retirement is of 60 years)
Rate of return on corpus amount= 8%
Rate of inflation = 6%
Inflation adjusted rate of return =
(1+0.08)/(1+0.06) – 1
= 1.89%/12 = 0.001575
Retirement Period calculated in months = 240 months. (20 years *12)
PMT = Inflation adjusted monthly income at retirement = 2,305,826/12 = Rs 192,152
To learn more about your retirement corpus, you can visit the Max Life Retirement Planning Calculator here.
Did You Know?
To calculate the retirement corpus, the ClearTax Retirement Planning Calculator takes into account existing savings or investments. If you have current investments, you can accumulate funds for retirement at a faster rate.
Retirement Date Calculator
The retirement age for Indian government employees was raised from 58 to 60 years old by a DoPT order issued on May 30, 1998. Currently, the retirement age for CG employees, including railway employees, is 65.
Every employee wants to know when his last day of government service will be. Our readers want to know, “How do I calculate my retirement date based on the length of qualifying service?”
The method for determining the retirement date is straightforward. When you reach the age of 60, that is the only day you can retire. A minor stumbling block in determining the retirement age of someone whose birthday is on the first of the month.
Retirement Gratuity Calculator
A retirement gratuity calculator is a tool that estimates the amount of gratuity one will receive if one leaves their job. It is a useful tool for employees who intend to retire from their jobs. The gratuity calculator is based on a formula with multiple inputs. These include the most recently drawn monthly income, the number of years of service (including months), and the dearness allowance. The calculator returns the gratuity amount in seconds and is simple to use. It is completely free to use multiple times. In addition, the calculator aids in long-term financial planning for a stress-free retirement.
The Payment of Gratuity Act of 1972 establishes the rules and formula for calculating the Gratuity Amount. The Act divides employees into two categories:
Employees covered by the Act fall into the first category.
Employees who are not covered by the Act fall into Category 2.
The categories listed above apply to both private and government employees. However, the pay structure varies for government employees, necessitating the inclusion of additional heads.
How to Calculate Gratuity?
The gratuity amount can be calculated using the Gratuity Calculator Formula.
G = n*b*15/26 Gratuity
n = The number of years completed in the current organization.
b = the most recently drawn basic monthly salary (plus dearness allowance, the commission received on sales, if any)
Note:
Gratuity is calculated using the number of working days in a month as 26.
Wages are calculated at a rate of 15 days for gratuity.
Let’s look at how to calculate gratuity for both of the categories mentioned above.
Category 1:
Employees who are covered by the Payment of Gratuity Act fall into this category.
The formula for calculating gratuity for employees in this category is
G = n*b*15/26 Gratuity
The formula is based on last-drawn wages of 15 days for each year or a portion of a year of service that exceeds six months.
Ms Arya, for example, has been with ABC Pvt. Ltd. for seven years and three months. Her most recent pay stub totals INR 100,000. Gratuity = 1,00,000*7*(15/26) = INR 4.03 Lakhs is the total amount she would receive.
Category 2:
For each completed year, the amount of gratuity payable to the employee is calculated based on half a month’s basic salary.
For example, Mr Sachin has been with XYZ Pvt Ltd. for ten years and nine months. His most recent basic salary is INR 85,000. The amount of gratuity he is entitled to be.
85,000*10*(15/30) = INR 4.25 Lakhs Gratuity
In this category, the number of years is calculated based on the number of completed years. Sachin worked for the company for ten years and nine months, but his tenure was only ten years, not eleven.
Retirement Age Calculator
The retirement age varies by country. The age of retirement in India is 60, at which point you will have to take retirement from active service.
You can use a retirement age calculator to calculate the age at which you will retire based on your current savings rate and your expected return on interest, and your post-retirement lifestyle. The components of our age-to-retirement calculator are as follows.
Your current age: Enter your current age.
Current retirement savings: Enter the amount you have currently set aside for retirement.
Monthly investment amount: Enter the amount you put aside for retirement each month.
Annual interest rate: Enter the expected annual return on your investments.
Amount at retirement: Enter the amount you wish to have when you retire.
For example, if you are 30 years old and have Rs. 50,000 saved for retirement, invest Rs. 500 each month, expect an annual interest rate of 7% and want to accumulate Rs. 10 lakh before retiring; you may be able to retire as early as age 60. You will invest only Rs. 2,29,000, but you will earn approximately Rs.7.74,071 in interest, bringing your total to just over Rs.10 lakhs.
Use our online retirement date calculator to calculate your retirement age. Continue to use this tool to ensure you’re on track to meet your retirement savings target.
FAQs
A Retirement Planning Calculator will determine how long your retirement fund will last after you retire. You must estimate your life expectancy in order for the calculator to provide an accurate estimate of how long the retirement corpus will last.
A retirement calculator assists you in determining the retirement corpus required to maintain your current lifestyle. If your current lifestyle or retirement goals change, you must update the necessary figures so that the calculator can provide an accurate picture of how much money you will require in retirement.
Market inflation reduces the purchasing power of money over time. If you wish to maintain your present lifestyle after retirement, you must earn returns that are higher than inflation over the long term. Based on your risk tolerance, you must invest in a financial instrument that can provide a return above inflation. The ClearTax Retirement Planning Calculator takes inflation into account to calculate the real return on your investment at retirement.
Also Read: Know about NPS Benefits on Investment Simplified
