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Retirement Planning Calculator

Age

Enter age between 18 to 50 years
18 50

Age at Retirement

Enter value between 40 and 70
40 70

Annual Income

Enter value between 10k to 10 Cr
₹ 10,000 1 Cr

Income Growth Rate

Enter value between 1 and 100
%
1 100

Current Investment

 Recurring
Stagnant

Current Investment (Yearly)

Enter value between 0 to 1cr
₹ 0 1 Cr

Pension Expected (Yearly)

Enter Amount between ₹10000 to 1cr
₹ 10,000 1 Cr
Inflation Assumed
6 %
Total funds needed
₹10,00000
Monthly Investment
₹10,00000

What is a Retirement Calculator?

What is the Formula for Retirement Calculator?

retirement calculator

What is the Formula for Retirement Calculator?

The mathematical formula on which the retirement planning calculator functions is:

FV = PV (1+r)^n.

Where,

  • FV - Future Value
  • PV - Present Value
  • r - Expected Inflation
  • n - Time to Retirement

How Does a Retirement Planning Calculator Work?

Here’s an example that will help you understand how the retirement planning calculator works.

Let’s say this table describes your scenario -

Parameters Data
Present Age 35 years
Retirement Age 60 years
Required Monthly Income Post-Retirement ₹35,000
Life Expectancy 80
Inflation 6%

Now, let’s say you wish to invest your retirement corpus in a bank FD offering an 8% yield.

So, as per the formula FV = PV (1+r)^n,

FV Required Annual Income
₹35,000 (1+0.06)^25 = ₹1,50,215.5 ₹150215.5 x 12 = ₹18,02,586

As per your life expectancy, your retirement period is 20 years.

FD Yield Inflation Inflation-Adjusted Rate of Return
8% 6% (1+0.08)/(1+0.06) - 1 = 0.001575

So, the inflation-adjusted rate of return becomes 0.001575.

Retirement Period in Months PMT
12x20 = 240 ₹18,02,586/12 = ₹1,50,215

You can now calculate your retirement corpus in an Excel Calculator using the PV function.

Select the following in the retirement calculator, as shown in the table below.

PMT 150,215
NPER 240 months
Type 1
Retirement Corpus ₹3,00,48,832

Therefore, the retirement corpus you need to generate the annual income of ₹18,02,586 is ₹3,00,48,832.

In simpler words, you need to invest ₹3,00,48,832 in your 60th year at a return rate of 8% to get an annual income of ₹18,02,586 for 20 years.

How to Use the Retirement Planning Calculator?

It is an easier method to use the calculator than calculating using the formula. All you need to do is follow the simple steps mentioned below.

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Step 1

Enter your current age in the check box or select it from the sliding button. Next insert your expected retirement age using the slider option. The scale is between 40 to 70 years and you can also type your retirement age directly.

Step 2

Now you need to provide your annual income by dragging the scroll button between ₹ 10000 to ₹ 1 Crore and also select your income growth rate over the years.

Step 3

After this you need to select if your current investments are recurring or stagnant and provide your current annual investment amount in rupees.

Step 4

Now choose your annual expected pension after retirement and select an assumed inflation for the given period of time, which is set at 6% by default. Finally check the funds you need to maintain your lifestyle, and plan your retirement accordingly.

What are the Benefits of a Retirement Planning Calculator?

advantages of retirement calculator

What are the Benefits of a Retirement Planning Calculator?

An online retirement calculator has several benefits. It helps you to -

  • Figure out how much you need to save monthly to retire with a large corpus at the end of your professional career.
  • Determine the specific investment opportunities you need to consider.
  • Compare the various retirement options and plans.
  • Save time with a few simple clicks.

 

Now that you are aware of the working, usage, and benefits of a retirement calculator, it is time you use one to ensure a financially secure future.

FAQs about Retirement Calculator