Pension Calculator

Planning for retirement is one of the most crucial aspects of financial well-being. A pension calculator helps you estimate the amount you need to invest today to secure a stable and sufficient income post-retirement. It gives you a clear picture of how much corpus you will need and how your current investments will shape your retirement fund.

How does the Pension Calculator work?

The Pension Calculator takes into account your current age, retirement age, monthly expenses, expected inflation rate, rate of return on investments, and life expectancy. Using these inputs, it helps determine:

• How much corpus you’ll need at retirement to cover your expenses post-retirement.
• How much you need to invest regularly to accumulate this corpus.

The formula used to calculate the retirement corpus is:

Future Monthly Expense = Current Monthly Expense × (1 + Inflation Rate)^{Years till Retirement}

Retirement Corpus = Future Monthly Expense × 12 × Number of Years in Retirement

For example, if your current monthly expense is ₹30,000, you are 30 years old and plan to retire at 60 with an inflation rate of 6%, your monthly expense at retirement would be:

₹30,000 × (1 + 0.06)³⁰ = ₹1,72,304 (approx.)

Assuming a life expectancy of 85 years, you'll need this amount for 25 years. So, your retirement corpus would be:

₹1,72,304 × 12 × 25 = ₹5.16 Crores (approx.)

Benefits of Using a Pension Calculator

• Goal Clarity: Know exactly how much you need to retire comfortably.
• Early Planning: Start early and invest smaller amounts regularly to build a sizable retirement fund.
• Customizable Inputs: Adjust inputs as your lifestyle or financial goals change.
• Track Progress: Periodically update your inputs to stay on track with your retirement goals.

When to Use a Pension Calculator?

• When planning long-term financial goals like retirement.
• When reassessing your retirement goals after a major life change (job change, marriage, etc.).
• To evaluate how much more you need to save for a desired post-retirement lifestyle.
• To find the balance between saving for retirement and fulfilling current obligations.