Retirement is an age that is meant to be peaceful and hassle-free. Nothing can and should spoil retirement for anyone. Not even finances. Hence retirement planning becomes essential right from the age one starts working. The earlier one plans for retirement, the better are the chances to accumulate the needed corpus. A retirement calculator is a tool that helps in planning retirement in a simple and easy way.
What is a Retirement Calculator?
A Retirement calculator is an online tool that helps in determining the retirement corpus. It is better to start planning the retirement funds needed for a stress-free lifestyle post-retirement and start investing in it. The retirement calculator helps in figuring out how much one needs to grow their wealth before retiring.
Retirement requires a combination of Personal and Financial Planning. Personal planning determines satisfaction during retired life, while financial planning helps in budgeting income and expenses based on the personal plan.
Personal Planning can be done by answering a fundamental yet powerful question yourself. ‘How would you want to spend time during your retirement?’
While financial planning will help estimate whether one has adequate retirement funds to achieve the kind of retirement that they are envisioning. Mostly, income during retirement would be either through government pensions or employment-related sources or personal investments.
All this is easier said than done. Therefore, Retirement Planning Calculator in India makes it easy for investors to determine their retirement corpus and start investing in it.
How to Use Scripbox’s Online Retirement Calculator?
Scripbox’s Retirement Calculator online is an intuitive tool. Also, it allows investors to try various permutations and combinations to determine their retirement corpus. Thus, you can use this as an early retirement calculator if you plan to retire soon. It is available online for free. Let us see how one can use the best retirement calculator in India to maintain a comfortable retired life in India.
Step 1: Enter Your Current Age
These help in planning investments. In other words, a retirement fund would vary from person to person. For example, an investor starting their retirement savings at 30 years may have a more aggressive portfolio. While an investor beginning at 45 years is likely to have a less aggressive portfolio. Therefore, the corpus is determined by knowing your current age.
Step 2: Enter Retirement Age
Provide the age at which you want to retire. Your retirement age and your current age will help in determining the period available for building your retirement corpus. For example- if you are starting very early at an age of 20 years and you wish to retire at the age of 60 years then you have 40 years to build your retirement corpus. On the other hand, if you start at an age of 35 years then you will have 25 years to build your corpus for a retirement age of 60 years. Hence, the gap between the current age and retirement age plays a vital role in retirement planning.
Step 3: Enter I Want to Plan for Age
Provide the age for which you wish to plan your retirement. This is a common mistake made by many investors. Many investors consider just the retirement age and forget about the life span after retirement during which you will not be earning a substantial income. Your ‘Plan For Age’ is the number of years after retirement. Let’s say you wish to retire at 60 years but you wish to plan your investment for 20 years after retirement. The longer the period after retirement the higher the investment and corpus you need to build for your retirement.
Step 4: Enter Current Monthly Expenses
Your current monthly expenses will define your lifestyle and accordingly how much amount you will need post retirement to maintain your lifestyle. Due to inflation and reducing purchasing power of money these expenses will become costlier over a period of time. It determines the future value of these expenses and future cost of living. Hence, the calculator will account for these expenses, the yearly rising inflation, and your standard of living. Identify expenses, such as house rent, bills, salaries to household help, fuel, maintenance, medicines, etc.
- Monthly Rent – Monthly rent if staying in a rented house. If staying in an own house, mark it as zero. EMIs will also be excluded
- Household Expenses – This would include salaries for household help, groceries, personal care, commute, water, and electricity.
- Shopping & Dining – Include monthly average amount spent on garments, dining out, electrical appliances, electronics, furniture, etc.
- Health Care – Expenses on hospital visits, medicines, medical tests, gym subscriptions, etc.
- Vacation – Expenses on travel to other cities, visits to hometown, relatives & friends, tourism, etc.
Based on the above details, the retirement calculator online determines the retirement corpus. Scripbox’s Retirement Corpus Calculator in India doesn’t end here; it also advises a suitable plan to make investments to achieve the corpus over the years.
How Does a Retirement Planning Calculator Work?
Scripbox’s Retirement Calculator helps in understanding how much one would need to ensure an adequate amount for effective retirement planning. However, the retirement calculator online requires specific details to calculate the retirement corpus.
Basic details such as present age, retirement age, and life expectancy are required to project the expenses and the duration of investments.
The retirement calculator in India also requires monthly expenses such as utility bills, house rent, driver/maid/ cook salaries, maintenance, fuel, leisure, medicines, etc. It determines the future value of these expenses. Using this retirement calculator with inflation helps estimate the future value of the costs.
Personal details such as marital status, dependents, city of residence, habits are also captured in estimating the retirement corpus. These details help in understanding the family status and design the plan accordingly.
Current investments are also assessed to understand how much more needs to be invested to attain financial independence during retirement.
Based on the above details, the retirement calculator online determines the retirement corpus. Scripbox’s Retirement Calculator in India doesn’t end here; it also advises a suitable plan to make investments to achieve the corpus over the years.
Benefits of Using a Retirement Corpus Calculator
A retirement calculator is a handy tool. Also, it helps in planning a smooth and hassle-free retirement life. Below listed are the benefits of a retirement calculator.
- Retirement Planning: The calculator helps in planning the finances for the post-retirement life. All of us are different. Some want to travel post-retirement while some want to enjoy the countryside. One requires money to fulfill these goals. The calculator helps in planning how much money is needed to achieve financial goals post-retirement.
- Better understanding of finances: The calculator gives a clear picture of how much one has to save/invest monthly for meeting financial goals post-retirement. It takes into consideration all other retirement investments. Then calculates how much more one has to invest to achieve their financial goals.
- Plan and compare: The retirement calculator can help plan different ways of retiring. It has the option of entering existing investments. One can use this to their advantage by planning various investments in PF or other retirement investment plans. Also, it will modify the current investments one has to make for retirement. Individuals can then compare all the plans and find out the best plan for their retirement.
- Easy to use: The calculator is straightforward to use. The inputs are all investor details, such as age, monthly expenses, retirement age, and any existing investments.
- Time saving: Planning retirement manually can be very tiring. One has to decide their expenses and the age of retirement. And then calculate the future value of expenses with the current inflation rate. Finally, calculate the amount needed to invest in the goals after considering the existing investments. The retirement calculator factors all these in and calculate the amount required after retirement within seconds.
- Free to use: One can use the calculator multiple times at free of cost.
How Much to Save for Retirement?
Let’s see how much Mr. Aansh Malhotra would need at retirement. He is a 30 years old married man who is planning to retire at the age of 60 and expects to live till 85 years. The rate of return for his investments is considered to be 12% p.a. Inflation rate is 6%. His monthly expenses are INR 50,000. Also, he spends INR 1,00,000 annually on health and vacation. It is assumed that the expenses after retirement will reduce to 75% of his current expenses and that he currently has no investments for retirement.
|No. of years to retirement (T)
|No. of years after retirement (N)
|Expected rate of return [R]
|Inflation rate (i)
|Return after inflation adjustment (r)
|Currently monthly expenses
|Health and vacation
|Current expense per annum
|Inflation adjusted expense per annum at retirement
|Corpus needed on retirement
|One time investment
Mr. Aansh Malhotra would need Rs 4.54 Cr at the time of his retirement. He can invest Rs 15.15 lakhs as a one-time investment or invest Rs 1.67 lakhs yearly for the next 29 years or invest Rs 14.7K monthly for 29 years 11 months to get the desired amount at the time of retirement. Also, he is planning for retirement at an early age. Hence the monthly investment is on the lower end.
Best Retirement Investment Plans in India
Investing for retirement has become a necessity. One has to take care of themselves. Here is a list of the best retirement plans available in the market.
Mutual funds are the best investment option available for fulfilling all financial goals. If planned properly, one can take complete advantage of them. Mutual funds are capable of offering significant returns that beat the benchmark. Investing in mutual funds for a long term goal like retirement can help unleash the power of compounding. Also, if this is combined with SIP, then the benefits will multiply. Investing in equities for retirement is worth the risk. They aid in accumulating the needed corpus. If one is planning to invest in mutual funds for retirement, investing in equity funds is better. And while nearing the retirement age, one can switch to debt funds. Also, mutual funds shave no lock-in period making it desirable for all investors.
National Pension Scheme (NPS)
National Pension Scheme is the government of India’s initiative to provide retirement benefits to all the citizens of India. The scheme encourages investors to invest all through their employment years. They can redeem 60% of their corpus during retirement, and the rest 40% is utilised to purchase an annuity. It ensures a pension for the rest of their life post-retirement. The returns from NPS are market linked as a portion of NPS goes to equities. Investing in NPS is qualified for a tax deduction up to INR 1.5 lakhs under section 80C and additionally INR 50,000 under section 80CCD(1B).
Public Provident Fund (PPF)
Public Provident Fund is a long term investment option. It offers guaranteed returns that are regulated by the Finance Ministry. The interest rate is 7.1% p.a. (for the quarter 1 April 2020 to 30 June 2020). The interest is paid every year on 31st March. Also, the investment in PPF qualifies for a tax deduction under section 80C.
Furthermore, the interest and accumulated amount are tax-free at the time of maturity. The minimum investment is INR 500, and the maximum is INR 1.5 lakhs, which can be made at regular intervals or lumpsum. Once invested in PPF, the money is locked in for 15 years.
Employees Provident Fund (EPF)
Employees Provident Fund (EPF) is maintained and overseen by the Employees Provident Fund Organization of India (EPFO). It is a retirement benefits scheme for salaried employees. Around 12% of the basic salary is invested in this account. This monthly saving can be used when one is unable to earn or upon retirement.
Atal Pension Yojana (APY)
Atal Pension Yojana (APY) is a deferred pension plan for the unorganized sectors. To be eligible under this plan, one needs to be between 18 – 40 years of age with a savings bank account. Under this, there are 5 plans with guaranteed pension of Rs 1,000, Rs 2,000, Rs 3,000, Rs 4,000 and Rs 5,000. But unfortunately, there is an investment (and pension) cap for this. Do not depend solely on this source for retirement income.
Bank Deposits (FDs)
Fixed deposits are the safest investment option available in the market. The investment in tax saving FDs qualifies for a tax deduction under section 80C up to INR 1.5 lakh. Also, returns from these are fixed and are around 5.5-7.5%. FDs have a lock-in period of 5 or 10 years.
Investing in real estate is another option people look at for regular sources of income post-retirement. Though the rental yields aren’t that high, they provide diversification to one’s portfolio.
Comparison of Best Retirement Plans in India
|Equity Mutual Funds
|National Pension Scheme (NPS)
|Public Provident Fund (PPF)
|Employees Provident Fund (EPF)
|Fixed Deposit (FD)
|No lock-in for open-ended funds. EKSS funds have a 3 years lock-in.
|It can be closed while quitting a job at a company and it is transferable while shifting jobs.
|PPF is a Low-risk investment
|EPF is a Low-risk investment
|FD is a Low-risk investment
|Investment is Tax-free under section 80c. Maturity: 10% tax on long term capital gains.
|Investment: Tax-free under section 80c and 80d. Maturity: 60% tax free. 40% taxed in the year of receipt.
|The investment is tax-free under section 80c. Maturity: Interest and maturity amount is not taxable.
|Investment: Tax-free under section 80c. Maturity: Tax-free after 5 years from account opening.
|Investment: Tax-free under section 80c. Maturity: TDS on interest and interest is taxable as per income tax slab rates.
What are the Best Retirement Plans As Per Your Age?
Saving or investing for the purpose of retirement should start right from the time one starts working. But one need not worry if they haven’t started that early in life. Different age groups see life differently. People in their 20s are more inclined to spending or saving for short-term goals rather than long-term ones. In the 30s, people tend to be busy with loan repayments and kids. It’s in their 40s that people start investing/saving for their retirement. Even though they have 15 odd years in their hand until retirement, most of their savings have to be channelized towards their retirement. But it’s never too late to start investing for retirement. Agree that starting early has its benefits but better late than never right! Here’s a guide for people of different age groups that they can refer to for saving and investing.
In the 20s
If starting in the 20s, investing or saving 5% of one’s salary towards retirement is enough. They can gradually increase it to 10% in their 30’s. It is because the investment horizon is around 30 plus years, and compounding will do its magic in the long-term. The success of compounding lies not with starting early but sticking to it till the age of 60. It doesn’t matter if one starts investing at the age of 20 if he discontinues the investment soon. In the 20s, one has to look at investing more in equity than in any other asset class. Close to 90% of the investments can be in equity.
In the 30s
If starting in the 30s, investing or saving 10% of one’s salary towards retirement is enough, and slowly this can be increased to 40-50%. It is the age where the financial responsibilities will be at its peak with loan repayments, EMIs, and kids. So investing 10% is sufficient for now. Later the investments can be increased. Equities still should be a significant part of the investment (close to 80%). Debt, gold, and any other asset can take up the leftover part.
In the 40s
It’s not too late to start in the 40s. Saving 15% of one’s salary towards retirement is sufficient, which can be increased gradually later. Investing close to 70% in equities is suggested for people in their 40s. Debt can be close to 20-25% of the portfolio.
In the 50s
If starting in the 50s, 20% of salary should be invested in retirement. One will still have ten years until retirement, and this saving should be enough for reasonable living standards. Try increasing the investments at a faster pace as one has less financial responsibilities during this age. The kids will be done with college, and they will start working too, so the expenses are fewer. Hence start saving more. Investing close to 60-65% of assets in equity is suggested. Investment in debt securities will start increasing in assets at a faster pace.
In the 60s
A handful of them will be having regular income from employment. It’s time to relax and enjoy a lifetime’s worth of hard work and use the saved up money. Liquidating all the investments at once is not suggested. Opting for monthly income plans or redeeming investments calculatedly so that one can meet their monthly expenses is something one should concentrate on. Investments can still be made with 30% assets in equity and 70% assets in debt.
Finally, use the retirement calculator by age to determine the retirement corpus. It’s never too late to start saving. Start investing soon. Retirement is the age where all the hard work done reaps benefits. Let the savings do the job, while one enjoys their retirement.
Frequently Asked Question
While helping you arrive on the final sum required for you to retire confidently, we consider the following life and financial indicators:
Years to retirement
Rate of inflation
Expected income in the future
Rate of interest on your other savings
The amount of money you need to retire in India comfortably will depend on your lifestyle, inflation, and investments. Using the following retirement calculator formula, you can estimate the retirement corpus:
Retirement corpus = (annual expenses X number of years in retirement) / (1 + inflation rate)^(number of years until retirement)
Alternatively, you can also use Scripbox’s retirement fund calculator to estimate the corpus amount precisely.
Investing for retirement at the age of 60 years requires some planning with respect to your asset allocation. Having a conservative portfolio will help with stability. Having a high-risk investment isn’t ideal at the age of 60 years. Thus, an allocation of 65% to 75% in debt, 15% to 20% in equity and the remaining in cash or cash equivalents for quick access.