All About the Retirement Planning Calculator

  • Retirement Planning Articles

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Introduction

What is the first thing you think of when you picture your life after retirement? Perhaps you imagine yourself relaxing at home, getting a slow start to the day. Or perhaps, you dream of travelling the world. You may even imagine spending time with your family and friends, without worrying about deadlines and office work.

Whatever your hopes and goals for your post-retired life may be, it requires a strong financial safety net to make these dreams come true. That is because once you retire, you will no longer have a reliable source of income to fund your hobbies and your life goals. Instead, you will have to rely on your investments.

Here is where retirement planning is of crucial importance.

What is retirement planning?

Retirement planning is the art of planning your finances and investing in the right manner today, so you have a steady stream of income or a sufficient corpus to meet all your post-retirement life goals. It is the practice of ensuring that even after you have retired and have no source of primary income, you can continue to maintain your standard of living without any financial difficulties.

Also known as pension planning, the art of retirement planning is not a one-size-fits-all solution. It is unique for each individual, because the amount of corpus you need to retire comfortably depends on a number of factors.

How much do you need to save up for your retirement?

This is the most important question that retirement planning seeks to answer. It is important to figure this out early on, so you can choose and plan your investments accordingly. If you only figure out how much you need to save for retirement when you are in your late 40s or 50s, you have very little time to build that corpus.

To arrive at the magic number you need to save up, you need to take the following factors into consideration –

  • Your annual income
  • Your annual expenses
  • Your post-retirement life goals
  • Your debts and liabilities, if any

Your retirement corpus should be large enough to replace your primary income once you retire. It should also be sufficient to meet the life goals you still have to accomplish, like your children''s wedding or your home renovation. Furthermore, your retirement planning should also be able to cover any debts or liabilities you may carry on into your retirement.

Factoring in all these parameters and manually calculating the amount you need to save up as a part of your pension planning can be quite hard. Here is where a retirement calculator can help.

What is a retirement calculator?

A retirement calculator, also known as a pension calculator sometimes, is an online financial tool that can help you estimate the retirement fund that you need to retire comfortably. It allows you to figure out how much money you need to have in place when you retire from active work.

The ABSLI retirement planning calculator is one such online tool. To arrive at this number, the retirement calculator takes into account the following factors –

  • Your current age
  • The age at which you want to retire
  • Your gender
  • Your monthly income
  • Your monthly expenses
  • Your current total savings
  • The rate of returns you expect from your investments

Based on these parameters, the pension calculator gives you the following information in detail –

  • The amount of money you need to retire comfortably
  • How much your future monthly expenses could increase
  • The age up to which the corpus calculated will secure you financially
  • The amount of money you need to save each month to build the required corpus
  • The period over which you need to make this investment

How the retirement planning calculator works: An illustration

Let us take up a couple of hypothetical scenarios to check out how this online financial tool can help you get more clarity on your retirement planning.

Scenario 1:
Say you are 30 years old, and you want to retire at the age of 60. Here are the other parameters we''ll consider –

Current monthly income

Rs. 80,000

Current monthly expenses

Rs. 35,000

Current savings

Rs. 5,00,000

Expected rate of return from your investments

7% per annum


Once you enter these details, the retirement calculator will show you the following information.

Minimum corpus needed to retire comfortably

Rs. 2,70,00,000

Expected monthly expenses when you retire

Rs. 1,70,000

Age up to which this corpus will support you

85 years

Amount you need to save/invest each month

Rs. 18,893

Investment tenure

30 years


Scenario 2:
Say you are 40 years old, and you want to retire at the age of 60. Here are the other parameters we''ll consider –

Current monthly income

Rs. 1,00,000

Current monthly expenses

Rs. 40,000

Current savings

Nil

Expected rate of return from your investments

7% per annum


Once you enter these details, the retirement calculator will show you the following information.

Minimum corpus needed to retire comfortably

Rs. 1,30,00,000

Expected monthly expenses when you retire

Rs. 83,410

Age up to which this corpus will support you

85 years

Amount you need to save/invest each month

Rs. 25,089

Investment tenure

20 years


In this case, since you start saving for retirement later in life, and since you do not have any savings yet, you will have to invest more each month to build the required retirement fund.

Why use a retirement planning calculator?

There are many benefits of using a retirement calculator to compute the amount of money you need to retire happily. If you are still on the fence about using this online tool, check out how it can be immensely beneficial to you.

  • It gives you more clarity on your finances


    Often, you may think that you are more financially well off than you really are. While your income may be sufficient to meet your needs at present, your investments may not be enough to meet your needs once you retire. This is because of inflation. By using a retirement calculator, you can get more clarity on the bigger picture and see how your expenses could increase in the future. This, in turn, can help you plan for your future in a more realistic manner.
  • It is easy to use


    A pension calculator is extremely easy to use. Even if you are a beginner using this online financial tool for the first time, you''ll see how the details needed are simple and straightforward. The calculator also comes with clear instructions at each step, so you are not confused or in a dilemma about how to proceed. This makes the online retirement planning calculator a user-friendly solution for anyone who wants to secure their post-retirement financial safety net.
  • You can plan and compare your options


    A retirement planning calculator is free to use. You can use it any number of times without paying a single penny! This is incredibly beneficial because you can use the calculator to check out how different financial scenarios will play out. By modifying the different parameters like the expected rate of return, your retirement age, your expenses, and other such factors, you can check out how your retirement fund changes accordingly.

Conclusion

The bottom line is that a retirement planning calculator is a free-to-use financial tool that can help you immensely. Once you have that magic number in hand, you can create a financial plan that will help you build the retirement fund you need. The fact that you can figure this out so easily, right from the comfort of your own home, is enough reason to start your retirement planning today - if you haven't already done so.

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Retirement Plans

ABSLI Empower Pension Plan

This plan ensures that you remain in control of your destiny even during the second innings of life. UIN: 109L078V02

  • Guaranteed Additions
  • Financial protection for your family
  • Tax benefits1

ABSLI Empower Pension- SP Plan

A single premium plan that ensures you enjoy a much deserved comfortable retirement. UIN: 109L094V02

  • Guaranteed additions
  • Regular income
  • Vesting benefit as per plan option chosen

ABSLI Saral Pension

A single premium plan that provides guaranteed regular income for lifetime UIN: 109N130V01

  • Guaranteed regular income for life
  • No medical tests
  • Financial protection for your family

ABSLI Guaranteed Annuity Plus

This plan guaranteed income for life which enables you to enjoy a dream retirement life. (UIN: 109N132V02)

  • Guaranteed Lifelong income with a choice of multiple annuity options
  • Deferred Annuity option to build regular income stream for future with deferment period upto 15 years
  • Option to increase annuity through Top-up option

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