Pension Calculator: How much money do you need to retire?
Retirement years are best spent when you don’t have to worry about the basic needs, finances being one of them. Enjoy your post-retirement life, free from financial woes by calculating the amount you need to retire using a pension calculator.
After toiling for decades, everyone looks to have a worry-free time once they retire. You are finally free from the drudgery of work, and you can spend your days pursuing your favourite hobby, travelling to new places, and doing whatever pleases you.
Are you saving for Retirement?
To truly enjoy your retirement, you need to be free from financial concerns. This is where a retirement corpus comes into the picture. Just like other investments, you need to start planning for your retirement early on. The earlier you start, the bigger your corpus gets.
Now coming to the big question-
How much money do you need to retire?
There are no easy answers, and the one-size-fits-all approach certainly doesn’t work here. The amount you need to save for retirement depends on several factors like:
- Your current lifestyle
- The lifestyle you plan to lead after retirement
- The number of people you are saving for (just for yourself or for you and your spouse)
- Your retirement age
- Current age
To start planning your retirement fund, you first need to calculate your current expenses, extrapolate it for your retirement, factor in inflation, include other costs like medical expenses during retirement, and so on. This is where a pension calculator (also known as retirement calculator or retirement planner) becomes handy.
What is a Retirement Calculator?
It’s an online tool that helps you calculate the corpus. It gives you the approximate amount that you must save every month for enjoying a financially secure retirement. You need to provide specific details like:
- Personal information – Your date of birth, your retirement age, how many years you plan to save for, etc.
- Income details – Your current annual salary, current savings for retirement, etc.
- Investment Style – Choose between a conservative, moderate, or aggressive approach based on your risk appetite. To give an example, the planner suggests debt-based retirement plans for conservative investors and equity-based mutual funds for aggressive investors. Moderate investors can choose to invest 50% in equity and 50% in debt schemes.
Once you fill in the required details, the retirement calculator gives you an approximate amount you must save every month to build your retirement corpus. The corpus is created based on average life expectancy (generally around 75 years) with 6% inflation and 20% reduction of expenses post-retirement.
Some retirement planners even suggest the investment products you can choose to build the funds required.
Start planning for your Retirement Today using a Pension Planner
A retirement planner is an easy-to-use tool, and it takes just a few minutes. It does all the calculations on your behalf. However, note that retirement calculators are not 100% accurate as they depend solely on the inputs you provide.