Retirement Calculator
Estimate how much will you need when you retire
A retirement calculator can help you calculate a
number of things. It can help you determine the
amount of money you should be investing or saving
each month for your retirement. It helps you pick
suitable investment options based on the expected
returns on your investment.
Additionally, the calculator also helps you
understand the effect of inflation on your savings,
so that you can adjust your budget and plan
accordingly. Lastly, the retirement calculator gives
you an estimate of your post-retirement income.
Retirement expenses can be relatively lower than your pre-retirement expenses, but they are still a large amount. Inflation, rising healthcare needs, financial emergencies and expenses like home repairs, travel, essentials and more can pose concerns in retirement.
Therefore, it is important to save enough. You can use a retirement calculator when planning for your retirement to understand how much money you would need. Accordingly, you can build a nest egg that can last you a lifetime.
Why should I have a retirement plan?
A retirement plan helps to ensure a stress-free and comfortable post-retirement life. It enables you to protect your future financial interests and ensure the security of your loved ones in case of an unfortunate event. It makes sense to start reaping the power of compounding early on and getting the most out of it by retirement.
What is a retirement corpus?
A retirement corpus is the total fund you accumulate to meet your financial requirements post-retirement. This should be a financial reserve you can fall on, that can not only cover your day-to-day expenses but also take care of unexpected emergencies.
Benefits of using retirement calculator
Using a retirement calculator helps in planning
for life post-retirement.
You can assess how much post-retirement
income will be enough to maintain
your present lifestyle.
Provides financial clarity on how much income you will have post-retirement.
Helps you consider the effects of inflation and compare different yields earned through varying interest rates.
You can see how much corpus you can earn at 4%, 6%, or 8% rates per year and compare the returns yielded by different retirement plans.
3 Quick steps for Retirement Planning
Before you use a retirement calculating tool, you need to first assess some factors at your end. To simplify the process, follow this quick 3-step approach:
Note down your present monthly or yearly expenses. Add everything you spend your money towards – groceries, bills, utilities, loan repayments, and so on. Keep this amount aside. Note down how much you save. Now, envision how much you will spend on these expenses once you have retired.
Once you have an approximate amount, multiply it with the inflation rate during your retirement age. Let’s say, the inflation rate will be 6%. So, the additional post-retirement expenses in the next year would be = annual expenses x inflation rate (6%). Let’s put this in numbers to explain this a bit better.
Let’s say you retire at 60. The average life expectancy rate at birth in urban India is 72.6 *. Now, let’s say your annual expenses at age 60 are ₹ 4 lakh per year. With inflation, they will keep increasing each year. So, from the age of 60 till age 72, assuming a 6% rate of inflation, your annual expenses will look like:
| Age | 60 | 61 | 62 | 63 | 64 | 65 | 66 | 67 | 68 | 69 | 70 | 71 | 72 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Annual expenses | 4,00,000 | 4,24,000 | 4,49,440 | 4,76,460 | 5,01,991 | 5,35,290 | 5,67,408 | 6,01,452 | 6,37,439 | 6,75,792 | 7,16,339 | 7,59,319 | 8,04,879 |
| Assumed Inflation at 6% | 24000 | 25,400 | 26,966 | 28,584 | 30,299 | 32,117 | 34,044 | 36,087 | 38,252 | 40,547 | 42,980 | 45,559 | 48,293 |
| Total money accounting for inflation needed next year | 4,24,000 | 4,49,440 | 4,76,460 | 5,01,991 | 5,35,290 | 5,67,408 | 6,01,452 | 6,37,439 | 6,75,792 | 7,16,339 | 7,59,319 | 8,04,879 | 8,53,171 |
Inflation also affects your retirement savings. If inflation is high, the value of your savings can decline over time. This can deplete your savings sooner than anticipated and add the risk of outliving your savings.
A retirement calculator can help you plan for inflation in retirement planning to ensure your savings are not impacted by inflation in the future.
3 simple steps to use ICICI Prudential's retirement calculator tool
Once you have a rough idea of how much post-retirement income you will get, you can assess how much you should set aside to invest in a retirement plan. Here is where the retirement calculating tool will help you.
