How to Calculate Retirement Corpus in India

A secure and comfortable retirement is every working person’s dream. Retirement phase of life is inevitable and financial security becomes a primary concern. To enjoy  your retirement life, it is important that you plan your finances well. Some individuals put their retirement plans on the back burner, however, building a retirement corpus is necessary for you to lead a peaceful lifestyle.

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What is Retirement Corpus

How you want to spend your life post retirement require thorough planning and financial readiness. Considering the uncertainty of the time-frame of retired life, it is essential to be a little conservative in your spending and have a buffer while targeting a retirement corpus.

Also, never underestimate inflation while planning your retirement funds. The increased prices of goods and services may impact you post-retirement. Moreover, based on an individual’s current age, retirement goals will be different for everyone and will also depend on his/her needs and lifestyle. To begin early is the key, so you must save to ensure your financial independence post retirement.

There are mainly three stages of retirement planning, transition and withdrawal of funds. The steps below will help you plan your retirement well:

Calculate Your Retirement Corpus

This is the first stage of your retirement planning. It is important to determine the corpus you would need to sustain your current lifestyle after you stop working.In order to achieve a suitable value for your corpus, you can use retirement corpus calculator by following the below steps:

    •  Depending on your current age, you should calculate your number of years during which you would be working.
    •  Keep a tab on the inflation rate and calculate the annual amount needed to live a lifestyle similar to your current lifestyle after retirement.
    •  It is important that you check the return on your investments and consider the inflation rate to calculate the retirement corpus you need to accumulate for your post retirement life. 

Planning Your Retirement

Your present age and expected age are the initial indicators for determining your retirement plans. If this period is long then negative returns are mitigated due to the longer duration. After you have calculated your estimated expenses, you need to define investment patterns that will help you build up a retirement corpus. However, if you are unable to devise a saving strategy for your retirement, it is advisable to take services of a qualified financial advisor and portfolio manager. 

People Also Read: National Pension Scheme

Calculate Corpus for Withdrawal of Funds

If you calculate your current expenses after giving consideration to a specific rate of inflation, an individual can determine the expected return and adjust the same with the inflation rate to achieve the real rate of return, which is used during the withdrawal stage. Therefore, it is easy to calculate your monthly or annual savings to achieve your investment goals and help meet your objectives. 

For a comfortable lifestyle post retirement, it is therefore necessary that you start to save early in life. The simple way to plan your retirement is by saving at every stage of your work life. For instance, if you are working and in your 20s then start building a retirement corpus by saving 20% of your earnings. If you are in your 30s then save 30% of your earnings, and similarly, for your 40s, 50s and 60s, save from your earnings as they will play a significant role during retirement. If you accumulate all the savings from your early work days to your retirement time, you will actually have a huge corpus to help you sustain after retirement and have a sound financial life. 

*All savings are provided by the insurer as per the IRDAI approved insurance plan.
*Tax benefit is subject to changes in tax laws. Standard T&C Apply
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^^The information relating to mutual funds presented in this article is for educational purpose only and is not meant for sale. Investment is subject to market risks and the risk is borne by the investor. Please consult your financial advisor before planning your investments.

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