Retirement can be an exciting chapter of life that offers the opportunity to focus on the things you really enjoy and take the time to fulfil your dreams. Yet, in order to maintain a peaceful, secure, and stress-free retirement, planning is essential. By carefully planning for your future today, you can ensure that your golden years are financially secure to give you the freedom to pursue your passions, dreams, and hobbies.
Even if you are still young, retirement planning should be given priority – with a thoughtful consideration of your current needs and foresight into potential future expenses (travel plans or healthcare costs). An ideal way to start is by using an online retirement calculator that can help you understand how much funds or corpus is needed for the financial security that awaits you in retirement.
Read on to learn how a retirement calculator simplifies the retirement planning process and lets you focus on what’s most important – creating a secure financial future.
How to use the online retirement calculator?
You can find an online retirement calculator available on various websites. There can be a few variations in the design and features, but they generally function the same way.
- First of all, enter your personal details into the tool, including your present age, expected retirement age, annual salary, and current monthly expenses.
- Enter savings/investment details such as current savings balance, investment in mutual funds schemes, ULIP, etc. Provide the expected return on investment as well.
- Once you click on Calculate, the tool will display the total amount you need for retirement and how much you need to invest monthly to reach that goal.
Example: Let’s say you are 28 years old and planning to retire at 60; a retirement calculator will estimate a 32-year investing period in its calculation. If you decide to invest 15% of your annual income in a mutual fund retirement plan or another scheme, the calculator will project what amount of corpus you could accumulate by 60.
With the results produced by the calculator, you can determine whether it meets your expectation or if further changes need to be implemented to invest for retirement more effectively.
Why use a retirement calculator when planning for your retirement?
- To understand your finances better
A retirement calculator shows you the details of your finances, including income sources, monthly expenses, savings, and investments for retirement. This helps you better understand where your money is going and what other resources are available to help support your post-retirement lifestyle.
- To compare different investment plans
The tool also allows you to evaluate what kind of retirement corpus different investment plans will offer – from existing investments to additional investments. You can also see how different interest rates, such as 4%, 6%, 8%, or 10%, yield different returns per year. This way, you can pick a retirement investment plan that works best with your lifestyle and financial capabilities.
- To calculate instantly within seconds
Retirement calculators allow you to quickly and accurately plan your retirement by providing real-time data within seconds. By entering current age, retirement age, monthly expenses, and existing investments into the tool, you can instantly figure out the estimated corpus you need for a comfortable retirement.
Final words
Remember that retirement planning is more than just numbers – it’s about building your dream post-retirement life. Besides basics like health insurance and living expenses, your retirement fund should also include the social and lifestyle goals you have set for yourself.
An online retirement calculator can be a great starting point to determine the corpus you need for your golden years. From there, creating contingency plans, growing your savings account, and ensuring your investment portfolio is up-to-date should be the key considerations. And most importantly, consult a financial advisor frequently to get a customised strategy and retirement plan as per your risk appetite, approach, goals, and income.
