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Retirement is considered to be the golden phase by many people. However, one needs to have adequate resources at his/her disposal to have a stress-free and peaceful retirement. Building a retirement corpus requires meticulous planning and disciplined investing during the active working years. A retirement calculator is a free online tool that helps in figuring out the amount to be invested regularly to achieve retirement goals. A rewarding post-retirement life requires a combination of personal and financial planning. Everyone wants a different post-retirement life, which requires varying levels of retirement savings. Personal planning is needed to determine the life you want after retirement. Financial planning comes after personal planning. Financial planning is required to prepare a budget of income and expenses in alignment with the personal plan. A retirement planning calculator is the best tool to fine tune the financial plan for retirement. Without a pension plan calculator, it is not possible to get an exact idea of the time and the investment required to achieve retirement goals. A retirement calculator determines the monthly expenses you will need after retirement based on your current spending pattern.
Many people do not realise the importance of saving and investing while they are working. Once the active working years get over, the need for a substantial retirement corpus dawns on them. An adequate retirement corpus cannot be created in a few months or years; it requires long-term saving and investing. One should not wait for the later years in life for retirement planning. The earlier ones start the better. Here are a few reasons why you should plan for retirement early.
Retirement planning is not just about taking care of the necessities but also enjoying the post-retirement years. A retirement corpus should be large enough to take care of the health needs as well as the daily expenses after retirement. Starting early provides a larger number of years for saving and the growth of the money. If one starts saving for retirement in the 20s, he/she will be able to build a larger corpus even with relatively lower return on investment.
When one is young, the propensity to take risk is higher. The responsibilities are limited at a young age. As one grows up, family members increase and so do the daily expenses. The tolerance for risk decreases as responsibilities increase. There are fixed expenses like EMIs and other responsibilities. One can invest in market-linked products that may get greater retirement benefits.
When you remain invested for a long time, the investment gains from the power of compounding. The power of compounding kicks into action when the initial interest earned on an investment becomes a part of the principal amount and starts earning interest. If you start early, you can witness exponential growth due to the power of compounding. The power of compounding becomes effective only if one invests for the long term. Let us understand compounding with an example. For the sake of simplicity, let us consider a lump sum investment of Rs 5 lakh. Ramesh invested Rs 5 lakh at the age of 25 and got around Rs 34 lakh at the age of 50 with an annual rate of return of 8%. His friend Mohan invested the same amount just five years after Ramesh and earned 9% per annum on the investment. Even with a higher rate of return, Mohan’s investment was just worth Rs 28 lakhs at the age of 50. The power of compounding ensures that the investment grows rapidly as the duration increases.
If you have invested in a market-linked product, regular fluctuations can have an impact on the value of the investment. However, long-term investment leads to rupee cost averaging and nullifies the impact of daily fluctuations. When you invest small amounts regularly for retirement planning, the smaller contributions at different market levels averages the price of investment over the long run. With rupee cost averaging, the retirement benefits are protected from the vagaries of the market.
Starting early instils a sense of discipline towards savings and investments from an early age. Retirement planning requires systematic investments and control over expenditure. Starting at a young age ensures a financially disciplined life and a secure future.
The purpose of retirement planning is to create a corpus for a stress-free post-retirement life, but it also offers a number of tax benefits. The premium paid for a pension plan is eligible for tax deduction of up to Rs 1.5 lakh in a year under Section 80C of the Income Tax Act, 1961, subject to the provisions stated therein. The maturity benefits too are tax-free either completely or partially depending on the type of the plan.
Bajaj Allianz Life Retirement Calculator is an effective tool for retirement planning. Even though one stops working after retirement, the expenses do not stop. A retirement calculator provides the information on how much amount one would require to lead a comfortable post-retirement life. To generate the information, a retirement calculator requires certain information. The primary information required by the Bajaj Allianz Life Retirement Calculator is the monthly expenses of the individual. The current monthly expenditure is used to calculate the retirement benefits that will be required. The retirement calculator also needs the number of years one plans to work for and the number of years after retirement one would need the retirement corpus for. The Bajaj Allianz Life Retirement Calculator additionally asks for the expected inflation rate and the rate of return expected on the investment. The inflation rate is used to project the monthly expenses after retirement based on the current expenses. While providing the current expenses, include all the expenses from medical bills to employee costs. The calculator analyses the current investments to generate an estimate of the incremental investments required to reach the retirement goals.
The Bajaj Allianz Life Retirement Calculator is an easy-to-use online retirement calculator. It makes retirement planning convenient and hassle-free. With the variety of retirement plans in India, an effective retirement calculator is necessary for efficient retirement planning. To get the best results, you will have to provide certain details to Bajaj Allianz Life’s retirement calculator.
The retirement calculator asks for the number of years you plan to use the corpus for after retirement. If you are planning for a long post-retirement phase, you will need a larger corpus and vice versa.
In the next step, you have to provide the expected inflation rate. Inflation is a crucial factor in retirement planning. Inflation can severely erode the value of the retirement corpus. The Bajaj Allianz Life Retirement Calculator takes into account the inflation rate to project the monthly investment required to reach the retirement milestone.
The retirement calculator asks for the expected rate of return after the inflation rate. The annual rate of return will determine the duration and size of the retirement corpus. A higher rate of return will result in a larger corpus in lesser time or lower investments.
In the last step, the retirement calculator displays the amount needed to reach the retirement goal. Additionally, the calculator also shows the value of the current expenses at retirement.
The online retirement planning calculator is a simple, easy to-use tool that can be used to create an estimate of the required retirement corpus. It simplifies the process of factoring in the various expenses and investments needed to project the future needs of an individual. There are various benefits of using an online retirement calculator.
Everyone has different retirement goals. Some want to travel around the world after retirement while others want to build a beautiful home. All goals are equally important, but will require different amounts of money. A retirement calculator helps in getting an idea of the amount required to fulfil post-retirement goals.
A retirement calculator takes into consideration a number of factors such as inflation and investment tenure to generate the monthly amount required to meet post-retirement goals. It provides a clearer picture of the investment required to lead a comfortable post-retirement life.
A number of calculations have to be made to decide the size of the corpus needed post retirement. Different factors have to be taken into account like the inflation and the rate of return to assess the amount required after retirement. Making all the calculations after taking into account all the factors manually will be a tedious and lengthy process. A retirement planning calculator simplifies the entire process and makes it extremely convenient for investors.
It is not necessary to have only one retirement goal. There can be several retirement goals and multiple ways to achieve the goals. A number of investment options are available that can help one reach his/her retirement goals. Retirement planning calculator makes it easier to compare different investment options and retirement goals. It can be used to make comprehensive comparisons before investing.
The importance of some decisions are not apparent immediately but become clear only after a few years. Retirement planning is one such activity. The quality of retirement planning directly influences the quality of life after retirement. Earlier retirement was not looked upon favourably as people had limited choices of recreation or work after retirement. The poor quality of healthcare facilities made it difficult for retirees to lead a comfortable life. However, times have changed. With the improvement in healthcare facilities and emergence of retiree-specific societies, retirement has become a much sought after phase of life. To lead a stress-free and financially independent post-retirement life, one just needs proper retirement planning.
It is crucial to decide the retirement savings corpus while planning for retirement. Retirement savings is the amount of money generated from different investments and savings, which is earmarked for the exclusive use after retirement. The size of retirement savings will increase in consonance with the number of years one plans to spend as a retiree. If you plan to retire early, you need to have a large retirement corpus. There are a few mistakes one should avoid while deciding the retirement corpus or planning for retirement.
Inflation is a factor that silently erodes the value of your money. Many people make the mistake of not factoring in the inflation rate while deciding the monthly amount needed to take care of expenses after retirement. Inflation can substantially increase the cost of items in a few years. An average inflation rate of 6% per annum can push your monthly expenses to Rs 1.6 lakh from Rs 50,000 in 20 years. It essentially means that the products and services that you can buy for Rs 50,000 today will require Rs 1.6 lakh after 20 years due to inflation. A retirement calculator factors in inflation while making financial projections.
There are a number of life goals besides the retirement goals. One of the most common mistakes is to mix other life goals like children’s marriage and education with retirement goals. Plan separately for other life goals and keep the retirement corpus exclusively for post-retirement life. The retirement corpus should remain untouched until retirement. Mixing different life goals can lead to miscalculation and affect your retirement benefits.
One of the biggest mistakes made by a large number of people is to start saving for retirement late in life. It does not matter if you want to retire early or retire late, one should start saving and investing for retirement as early as possible. Starting early ensures that you have adequate time to build a retirement corpus large enough to take care of all your needs. The power of compounding also takes over when you invest for the long term and the investment grows exponentially in the later years.
Everybody has a different concept of retirement. For some it is the most desirable phase of life. It is considered the golden phase of life when one can fulfil all his/her desires like travelling the world or spending time with family. Many people are also deciding to retire early. The trend has caught up in India too. It does not matter if you retire early or late or continue taking up some form of work even after retirement, you will have to plan properly for retirement. Without proper retirement planning, you may have to make several compromises in life.
There are several retirement plans in India that can help you lead a comfortable and stress-free post retirement life. A retirement plan is an insurance-investment plan specifically designed to help individuals build a retirement corpus while ensuring financial stability. For a retirement plan to be effective, one needs to start as early as possible, to provide ample time for the corpus to grow. One has to pay regular premiums for retirement plans over the active working years. The regular investments are used to provide you life cover as well as accumulate wealth to be used after retirement. There are various types of retirement plans available in India.
ULIPs or unit-linked investment plans are market-linked investment financial products that provide the dual benefit of insurance and investment. The investor has the option to choose from a number of investment funds, which comprise of equity and debt funds. Depending on your risk profile and return expectations, you can opt between equity and debt funds. During the policy tenure, ULIP provides life insurance cover while paying the accumulated money at maturity.
Benefits of ULIP
Annuity plans are designed to serve the specific needs of retirees. The individual has to pay regular premiums throughout the policy term, which is invested by the insurance company. At the end of the policy term, the insurance company pays the accumulated fund in regular pay checks to help the policyholder take care of his/her expenses. Annuity plans are ideal products to ensure a steady income after retirement.
Benefits of annuity plan
Even though health insurance cannot be strictly placed in the bracket of retirement plans, it nevertheless is an important part of retirement planning. Healthcare costs make up a major portion of post-retirement expenses. A few days of hospitalisation without health insurance can make a serious dent to your retirement corpus. Health insurance is similar to life insurance. One has to pay regular premiums to keep the health insurance active and in return, the insurer bears the eligible healthcare costs in case of a health emergency.
Retirement pension plans are types of insurance products that have been designed to meet post-retirement needs. Pension plans require you to contribute regularly while you are working. The insurer invests the money and the accumulated corpus is provided after retirement. Many pension plan provide lump sum money, but annuity plans offer monthly payments after retirement. Bajaj Allianz Life offers a number of retirement plans.
A retirement calculator is a free online tool that helps in estimating the amount of money required by an individual to lead a comfortable post-retirement life. The retirement calculator takes into account various factors like the current expenditure, inflation rate, monthly investments and rate of return to give an idea about the size of the retirement corpus after a certain number of years.
Contrary to popular belief, daily expenses do not reduce substantially after retirement. A number of expenses like healthcare jump after retirement. One can use a retirement calculator to get an idea of the retirement amount one would need to live comfortably. The amount needed for retirement depends on the current expenditure, the expected duration of retirement and inflation. The expenses will remain almost similar but inflation will decrease the value of money and hence a higher amount will be required in future to maintain a similar standard of living.
The pension amount after retirement depends on a number of factors. The monthly amount saved and invested during the active working years will add up to the pension amount after retirement. The type of retirement plan too influences the pension amount as market-linked products like ULIPs may have a probability to generate higher returns over the long term.
Everyone has different lifestyle and retirement goals. The money needed to retire varies from people to people and depends on the monthly expenses. While finalizing the retirement corpus, do not forget to take into account the expenses apart from the necessary expenses like healthcare. Another important factor that has an effect on the retirement corpus is the age of retirement. One will require a larger corpus if he/she plans to retire early.
While planning for retirement, one should consider various factors. Before chalking out a firm plan, you should have the answer to a few basic questions like the age of retirement, the number of years in retirement and the monthly income you would require during retirement. Besides the investment horizon and the income required, take into consideration the inflation rate and consider your risk appetite while planning for retirement.
A retirement calculator is the perfect tool to determine the estimated retirement corpus amount. The retirement corpus depends on the monthly household expenditure. The current monthly expenditure has to be adjusted for inflation to get the amount that will be required after retirement. A retirement calculator takes into account the inflation rate along with the expected rate of return to provide the estimated retirement corpus for each individual.
The retirement age should depend on the current and projected retirement savings rather than personal whims. If you want to retire early, start saving and investing for your retirement at the earliest. Once you have a corpus large enough to take care of all the expenses for the post-retirement period, you can opt to retire.
It is important to understand the dynamics of early retirement before planning to retire early. To retire early, you will have a limited number of working years and a larger number of years to live off the retirement corpus. It results in a peculiar problem. One needs a larger corpus but has less time to build the corpus. To retire early, you need to start early, save more and invest in products like market-linked products, which may have the potential to earn high returns.
The type of retirement plan should depend on the requirement of the individual. If you need a steady income after retirement, annuity plans are more suited for you as they ensure that a regular amount is paid to the policyholder after retirement for the rest of the life. On the other hand, if you need a large corpus to achieve retirement goals like travelling the world, you can consider ULIP plans. ULIPs invest in market-linked securities and have a potential for relatively higher rates of returns.
The required retirement amount is not uniform for all individuals. Rs 1 Crore may be sufficient for someone, but may not be enough for many individuals. The retirement amount depends on the post-retirement expenses of an individual. Hence, one needs to plan for as per their own risk appetite and needs.
The findings generated from the above calculator is completely and solely based on the information shared by you with respect to questions being asked his has no linkage with any offer/benefits/outcomes associated with our Products. Bajaj Allianz Life will not be responsible for any kind of repercussions on any decisions made by you basis the use of this calculator. For calculator purposes, it is assumed that the payments are made in advance i.e beginning of the month
Last updated: 2021-05-20