What is meant by the retirement?
Retirement in simple words mean that it is an act of leaving the job or giving up working or in other words, leaving one’s job. Apart from this, it becomes mandatory for all that the time they have started working, they should also look for ways through which they can save money for their future especially for the time when they have to retire. However, there are also those people who opt for semi – retirement which in turn means that the number of working hours have been reduced than the usual work timings.
Now whatever may be the case, it is advised to one & all that they be in a position to face it. Hence, knowing as to how much money you would require post your retirement would certainly be an added advantage. However, getting to know the amount of money required for such a task involves a number of things. The reason is that when you are aware of it, it would be a trouble – free process for you as well, to get to calculate your retirement expenses which will in – turn help you to save for the future.
What is the use of this retirement calculator?
With the cost of living rising day by day apart from the rise in the commodities, planning for your retirement has become an integral part of financial planning. Hence, if you wish to work hard & enjoy your life even after you retire then getting to know or at least being ready to face your future would be the best option. And if you are thinking of selecting some investment options for the future then it would be an added advantage.
Therefore to make things simple for everyone, we have put forth a retirement calculator which would help you to have an idea as to how much money you would require for the post – retirement life. Continue reading to know more.
How to use the retirement calculator?
The steps to use a retirement calculator are very easy & all you would have to do is keep reading the given below statements very carefully in order to make use of the retirement calculator in a right manner. In addition to this, one can either utilise the slider or type the number in the field marked so that the information is known so as to get to know the total amount.
In the 1st field of the retirement calculator, one has to select the age (present age) & this age is mentioned in years, whereas in the next field, an individual would be required to mention the age as to when they wish to retire. This age is also to be mentioned in years only. Everyone will have to understand the fact that there are some guesses involved in this theory as well because in the next field, one will have to mention the life expectancy & this of course is only expected. You will also have to enter the current monthly expenses, inflation rate & click on calculate to get the result.
Retirement calculator formula
In order to calculate retirement, you would be required to follow the basic formula that is mentioned below so that one gets to know as to how much money they would require by the time they retire. To know the same, we have given an example here for better understanding.
E.g.: Get to know as to how many years you will work. Let us say you are 27 years old & will retire when you are 67, so you would be saving for about 40 years. However, you should plan to save for at least 30 years so that you retire peacefully.
It would be a plus point if you get to save 70 % of your total income. But one has to remember that that 70 % does not include any kind of expenses. Hence, the amount being saved every month would differ from person to person. In addition to this, the inflation rate on an average is 2.48 % thus, for retirement the following amount would be required is as follows –
The above amount has been calculated in rupees.
\(3,40,000 \quad per\quad year\quad \times \quad 30\quad years\quad =\quad 10,200,000 \quad \times \quad .70\quad =\quad 71,40,000 \)