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How to Calculate Your Retirement Corpus?

Nov 14, 2019 | 5 months ago | Read Time: 3 minutes | By iKnowledge Team
How to Calculate Your Retirement Corpus?

What do you mean by Retirement Corpus?

Retirement corpus is the amount you would need to generate monthly income after retirement. Retirement planning is the process of estimating adequate income post-retirement.

Why do you Need to Plan Your Retirement?

Do you want to live a happy and peaceful life after your retirement – a phase when your monthly income is no longer coming into your account? The key to having a happy life post-retirement is to start as early as you can and have a retirement amount in mind.  You need to plan for an amount that shall meet all your financial needs and goals in the future so that you don’t compromise on your lifestyle or quality of life at any stage.

Let us think of this situation so that you can easily understand the importance of having a proper retirement plan. You are 25 years old currently, and you want to retire by the time you are 50. So, you have 25 more years to save for your retirement corpus. After you have retired, you will not have your monthly income anymore. However, you may want to travel, meet your medical expenses, without any hassles and live the same way that you lived before you retired. If you plan right away, this is 100% possible.

Why Use a Retirement Calculator?

To find out how much money you will need by the time you retire at 50 years, you will need a calculator. A retirement calculator India will ask you for the following details:

  • Current age
  • Age when you plan to retire
  • Life expectancy
  • Annual Income
  • Annual rate of increase in income
  • Current savings, if any
  • Type of investments held
  • Total monthly expenses and its breakup

Once you fill in these details, the calculator will take into account the current rate of inflation as well and come up with an estimate of the total corpus that you need after retirement. It will also tell you the amount that you must set aside every month to get to the corpus that you need.

When to Start Planning for Retirement?

The straightforward answer to this question is – as early as you can. Let us again see the example that we mentioned at the beginning of this article. In this example, you have 25 more years to build to your corpus; therefore, you can put aside a reasonable sum every month, without taking too much of stress. On the other hand, if you were to start planning for your retirement only when you are about 40 years, you have only 10 years to build to your corpus. Naturally, the monthly savings will be quite huge, and it may affect your current lifestyle to a large extent.

If you have missed the bus in the early stages, you can still catch up with your retirement corpus, if you invest in the right retirement plan.

Some Tips for Your Peaceful Retirement

  1. Never withdraw funds from your retirement corpus, before you have retired, irrespective of the financial urgency.  You can use other options like partial withdrawals from investments, withdrawing from your PF account, etc.
  2. When you have used a diverse range of investment options to save money monthly, it is very important to review these investments regularly and change them, if needed, to enjoy maximum returns.
  3. If you have chosen a market-linked returns plan (ULIP), you should be very careful not to invest all your money in equity. Yes, as a youngster, you may be an adventurous risk-taker, but it is wise to choose a balanced portfolio because you don’t want your retirement corpus to suffer because of your aggressiveness, do you?
  4. It is highly recommended to have different plans for different goals such as retirement, child’s marriage, higher education, etc. Never use funds that are intended for some specific purpose, when you need money.

If you want to enjoy a happy and stress-free life post-retirement, it is highly recommended that you start saving as early as you can, so that you can get maximum benefits. To know about Aegon Life’s life insurance products like term insurance and other products, visit our home page.


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