Pension Calculator for Retirement
Pension calculator helps you calculate the amount you could invest towards a retirement plan. Based on a regular monthly contribution, this calculator helps you calculate the lump sum amount you could save for the retirement days up to the age of 60 years.
You will retire in ! By then
What is a Pension Calculator?
A retirement planning calculator or pension calculator calculates the amount you may require to accumulate by the time you get retired. This also provides an approximate amount that you may need to save every month for securing yourself financially. A basic online pension calculator in India has the following fields:
- Personal Details - Such as your date of birth, your expected retirement age, and your accommodation time by the time you will be retired.
- Income Details - Such as your current annual salary.
- Savings Details - How much are you saving every year is asked in this field.
Based on these details, an online pension plan calculator provides its assessment related to your monthly pension requirement and the amount that you may need to achieve the same.
Note: Most of the calculators give you the option to edit the growth of your annual income; you can select/ edit the same. You can also fill the option of growth in your savings annually before calculating the pension with the help of pension calculator.
Benefits of Pension Calculator
It is one of the most valuable tools available online for drawing a map of your financial plan with few assumptions. Let us know the need for a retirement planning calculator more deeply:
- To Know the Amount of Saving: Despite your regular savings, you do not know how much you require in your old age as a pension. However, calculating it through pension plan calculator, you can easily get to know the amount that you should save for your post-retirement age to maintain your lifestyle.
- To Know the Approximate Amount of Investment for After Retirement Age: After knowing the amount of saving, the next thing that matters the most is the amount of money needed to achieve that goal. An online retirement planning calculator provides you a clear idea of that as well. So, it not only gives you the idea of the amount that you may need in your post-retirement life, instead it gives the idea of the amount that you must invest to achieve that goal.
How to Use Pension Calculator?
In our online retirement planning calculator, all you have to do is fill the following fields:
- Date of Birth: This field of the pension plan calculator is there to find out your current age. You can do the same by selecting your date of birth from the field provided for the same.
- Retirement Age: Fill the approximate age at which you want to get retired.
- Annual Income: provide your annual income in this field.
- Savings: Your yearly savings.
- Post Retirement Accommodation: Under this dropdown select the type of your post-retirement accommodation, which can be - rented our own.
Filling these details will provide the year by which you will be retired. In addition to this, these details will also give the amount that you will be earning with the assumed growth of 5% and the growth in your savings at the rate of 5%. However, there are options to edit the assumed growth of ‘You will be earning’ and ‘Your savings will grow to’ fields.
Based on the above-mentioned data provided by you, our pension calculator will provide the monthly pension that you may need after your retirement. To achieve this requirement, the amount that you have to invest monthly under:
- For your post-retirement years, you will need a monthly pension of
- For the above requirement, you need to invest
For example: If your date of birth is 02nd April'1985 and you have selected your retirement age as 60 years. Your yearly income is Rs.5, 30, 000 and your yearly savings are Rs.20, 000. By your retirement age, you will be living in rented accommodation.
By filling these details, the pension plan calculator will give the following details -
- You will be retiring in - 2045! By then
- You will be earning Rs.18, 84, 506 per annum with assumed growth @ 5% (you can edit this percentage and recalculate)
- Your savings will grow to Rs.71, 113 per annum with assumed growth @ 5% (you can edit this percentage and recalculate)
- The assessment of the pension calculator in India:
- For your post-retirement years, you will need a monthly pension of Rs.86, 373 (you can view the calculation details with the help of pension calculator)
- For the above requirement, you need to invest Rs.11, 416 monthly (you can understand the reason for the same as well by clicking the relevant button).
The post retirement life of an individual is said to be the golden period of his life. It is the time when a person pursues the ‘work he loves to do’ and converts his hobbies into professions. To fulfill all these desires and have a comfortable life post retirement, an extensive process of sensible planning with years of persistence is required, which be done using our Pension Calculator.
Following are the various reasons why appropriate planning for retirement through our Pension Calculator is important
Benefits of Retirement Planning Calculator
Increased life Expectancy
With improved medical and healthcare facility, the life expectancy in our generation is more than the previous ones. Naturally, when you live more, your healthcare needs and other expenses also increase. This also implies the need to use our pension calculator to plan well and gather funds that should be sufficient to sustain the longer life.
Insufficient Employer Funded Pension
Usually, the employer or government funded pensions are insufficient to fulfill the post retirement needs and maintain the lifestyle an individual is used to. This is why it is essential to back your government or employer funded retirement or pension plans with a self-maintained financial cushion which is a pension or retirement plan and the best way to assess the sufficiency is the pension calculator.
Regardless of the children and family being supportive or not, most people, who have earned the bread for themselves and their family for their entire life, would not want to depend on their children or family members for meeting their expenses after retirement. And, maintaining an independent lifestyle is possible only if you have an effective plan and sufficient corpus for your golden years. The way to assess the corpus sufficient for you is by using our retirement planning calculator.
Social Security System
The social security system of our country is lagging behind in almost all aspects. Therefore, it is imperative that an individual plans well in advance to build a corpus which is sufficient enough to meet the regular expenses or handle any unforeseen event post retirement. To build a sufficient corpus, it is essential to know how much would be sufficient and our Pension Calculator can help you do that.
Contribution to Family
Naturally, every individual has an urge to support their family by providing for their loved ones at major events of their life even after they have retired. Retirement funds help you fulfill these desires while ensuring your future financial independence and our Pension Calculator is the best tool to help you calculate the value of these desires.
Pursuit of Interests
It is within the realm of possibility to desire a vacation or pursue a hobby once you reach you golden years and are already free from all the workplace responsibilities. Retirement funds achieve these aspirations and our Pension Calculator helps you know the amount of retirement funds required to do the same.
Keeping all these points in mind, it is wise to seek advice from a financial planner and understand his proficient outlook for your financial plan. Alongside, using our Pension Calculator is also a beneficial option.
A major part of planning your retirement is assessing the funds you would need post retirement to meet your regular expenses and fulfill your aspirations. To help you figure out the minutiae of such planning you can take advantage of specially designed Pension Calculator.
Importance of Pension Calculator
Pension Calculator helps you calculate your income requirements post retirement on the basis of your age, annual income, savings, nature of accommodation, and the expected growth rate. Pension Calculator basically helps you determine the monthly amount you need to invest towards a retirement plan, in order to meet your financial needs during your golden years.
Required Fields in the Pension Calculator
The following are the key inputs you need to key in the Pension Calculator in order to get viable results:
Date of Birth
The date of birth you need to enter in this field of the Pension Calculator is majorly for record keeping purposes. At the time of buying a policy on the basis of this calculation done in the Pension Calculator, you might need to submit documentary proofs supporting the same. Therefore, in order to get the most reliable results from the Pension Calculator, make sure you enter your date of birth as per your government IDs.
While the official age of retirement as per the government norms is 60 years for the salaried people, the Pension Calculator allows you to choose the retirement age as per your desire. This feature has been incorporated in the Pension Calculator keeping the self-employed people in mind as well the increasing trend of voluntary or early retirement.
In terms of annual income, you would be better placed to consider your net income instead of your gross income while using the Pension Calculator. This is because your gross income would include various fringe benefits that are given to you by your employer but do not reach your bank account.
Also remember, that the EMIs you pay towards any loan are paid out from your take home salary. Therefore, if you have any current loans, do take them into consideration before mentioning your annual income in the Pension Calculator.
This field of the Pension Calculator requires the amount you have saved till date. However, savings does not necessarily mean the amount of cash you have or your bank balance. It also includes the funds that are currently invested in various instruments like fixed deposits, equity-linked saving schemes, recurring deposits, national saving certificates, kisan vikas patra, etc.
Post Retirement Accommodation
In this field of the Pension Calculator you are required to mention the nature of your accommodation after retirement i.e. whether you are living in a property that you own or you rent. However, even if you stay in your own property, but, the EMIs towards its loan are still going on, then do not forget to take into consideration when mentioning your annual salary while using the Pension Calculator.
Growth Rate is the percentage by which a country’s GDP (Gross Domestic product) varies from year to year.
This Pension Calculator involves two kinds of growths at an assumed rate of 5%. However, the Pension Calculator also allows you to adjust the growth rate as per your desire.
- Growth in Annual Income
This field of the Pension Calculator shows your expected annual income in the year of your retirement. This amount is calculated by the Pension Calculator on the basis of an assumed growth rate decided by you or the system.
- Interest Applicable to your Investment
This column in the Pension Calculator denotes the value of your savings in the year of your retirement by the addition of interest you realistically expect to receive on your savings. This value is estimated by the Pension Calculator on the basis of an assumed growth rate which can also be decided by you.
You May also like to read: National Pension Scheme (NPS)
Pension Calculator - FAQ's
Q: How is Pension Calculated?
Every pension is calculated as per a set formula and is independent of the payment one makes towards the plan. The formula of the retirement planning calculator takes into account the pensionable salary of an individual and the years of his/her service. In this way, the longer one contributes in a plan and the higher is his/her salary, the more pension of that individual will be. The basic formula of pension plan calculator is:
Pensionable Salary X Pensionable Service/ 70
Q: What is a Pension Plan?
A pension plan provides retirement amount that an individual can get from his/her insurance provider regularly as a lump sum. In this way, a pension or retirement plan in India ensures a constant flow of monthly income as soon as one retires. For example, the Provident Fund (PF) is one of the popular retirement funds. For retirement planning and pension calculation he/she can use pension plan calculator.
Q: Is it Possible to Make Early Withdrawals from the Pension Plan?
Even though it is not recommended to make withdrawals from the pension plan until one reaches 59 ½ years of age. This is because withdrawals from any time before this age hit an early withdrawal penalty of 10% on top of the usual income tax. However, there are exceptions that Indian Revenue Service (IRS) waives the penalty of 10% in some cases, which as well depends on different plans. Therefore, one is eligible to take money from his/her pension funds in India before reaching the age of 59 ½ year, only if he/she encounters a sudden disability or if he/she becomes unable to bear his/her medical expenses that are 7.5% more than his/her gross income (10% if one is under 65 years).
Q: What does Happen if I Surrender my Pension Plan Before Maturity?
If you want to surrender your pension plan before it gets mature, and then the complete surrender value is added in the annual income and is taxed according to the tax slab. Moreover, you have to pay back the exemptions of the tax that you have availed on the premiums till now.