Retirement Calculator
Estimate your future retirement expenses, required retirement corpus and the investment needed to prepare for retirement.
Retirement Planning Details
Retirement Planning Summary
What is a Retirement Calculator?
A Retirement Calculator is a financial planning tool that helps users estimate their future monthly expenses at retirement, the retirement corpus required to support those expenses and the investment needed to prepare for retirement.
The calculator considers the user's current age, planned retirement age, life expectancy, current monthly expenses, expected inflation, existing retirement savings and expected investment returns before and after retirement.
How to Use the Retirement Calculator?
- Enter your Current Age.
- Select the age at which you plan to retire.
- Enter the Life Expectancy up to which you want the retirement corpus to support your estimated expenses.
- Enter your Current Monthly Expenses.
- Enter the Expected Inflation Rate used to estimate how your expenses may increase over time.
- Enter any Current Retirement Savings already accumulated for retirement.
- Enter the Expected Return Before Retirement for your current savings and future investments during the accumulation period.
- Enter the Expected Return After Retirement for the remaining retirement corpus during the withdrawal period.
- The calculator will estimate the Monthly Expense at Retirement, Required Retirement Corpus, Future Value of Current Savings, Retirement Funding Gap, Required Monthly Investment and Required One-Time Investment Today.
Understanding the Retirement Calculation
The calculator first determines the number of years remaining until retirement by subtracting Current Age from Retirement Age.
It then estimates the Monthly Expense at Retirement by increasing the entered Current Monthly Expenses using the Expected Inflation Rate until the selected Retirement Age.
The Required Retirement Corpus is estimated by calculating the amount needed at retirement to support monthly withdrawals until the selected Life Expectancy.
The calculation assumes that expenses continue to increase with inflation during retirement while the remaining retirement corpus continues to earn the entered Expected Return After Retirement.
The calculator estimates how much the Current Retirement Savings may grow by the retirement date using the Expected Return Before Retirement.
The Future Value of Current Savings is subtracted from the Required Retirement Corpus to estimate the Retirement Funding Gap.
The calculator then estimates the monthly investment required from today until retirement to accumulate the Retirement Funding Gap using the Expected Return Before Retirement.
It also estimates the one-time investment required today that may grow to the Retirement Funding Gap by the retirement date using the same Expected Return Before Retirement.
Why Use a Retirement Calculator?
- Estimate how inflation may increase your monthly expenses by retirement.
- Estimate the retirement corpus needed to support expenses throughout retirement.
- Consider the potential growth of existing retirement savings.
- Identify the estimated Retirement Funding Gap.
- Estimate the monthly investment required to prepare for retirement.
- Compare the monthly investment requirement with an estimated one-time investment requirement.
- Test different retirement ages, life expectancy assumptions, inflation rates and investment return assumptions.
Frequently Asked Questions
What does Monthly Expense at Retirement mean?
Monthly Expense at Retirement is the estimated monthly amount required at the beginning of retirement after increasing the entered Current Monthly Expenses by the Expected Inflation Rate for the number of years remaining until retirement.
What is the Required Retirement Corpus?
Required Retirement Corpus is the estimated amount needed at the beginning of retirement to support inflation-adjusted monthly expenses until the selected Life Expectancy while assuming that the remaining corpus continues to earn the entered Expected Return After Retirement.
Why is Life Expectancy required?
Life Expectancy determines the number of years for which the retirement corpus is expected to support withdrawals after retirement. A longer retirement period generally requires a larger retirement corpus.
What does Expected Return Before Retirement mean?
Expected Return Before Retirement is the annual return assumption used to estimate the growth of Current Retirement Savings and to calculate the monthly or one-time investment required to cover the Retirement Funding Gap before retirement.
What does Expected Return After Retirement mean?
Expected Return After Retirement is the annual return assumption used for the remaining retirement corpus during the withdrawal period. The calculator assumes that the unspent corpus remains invested while retirement expenses are withdrawn.
Does the calculator assume expenses stop increasing after retirement?
No. The calculator assumes that expenses continue to increase during retirement using the entered Expected Inflation Rate.
What happens if Current Retirement Savings are already sufficient?
If the estimated Future Value of Current Retirement Savings is equal to or greater than the Required Retirement Corpus, the Retirement Funding Gap becomes ₹0. In that situation, the Required Monthly Investment and Required One-Time Investment Today are also shown as ₹0.
When are retirement withdrawals assumed to occur?
For estimation purposes, this calculator models retirement expenses as monthly withdrawals made at the beginning of each month. The first withdrawal is assumed to occur at the beginning of retirement.
When are monthly investments before retirement assumed to be made?
The Required Monthly Investment calculation assumes that monthly investments are made at the end of each month until retirement.
Are the calculated retirement results guaranteed?
No. The results are estimates based on the values entered by the user and the mathematical assumptions used by the calculator. Actual inflation, investment returns, taxes, investment costs, withdrawal patterns and lifespan may differ.