How Should You Plan For Your Retirement?

By Author: SURAAJ
Total Articles: 3
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Why do we need to save for retirement? 
 
An average person is expected to live for longer now due to an increase in life expectancy as a result of advancement in medical science. So, you need to build a corpus large enough to be able to pay for your regular expenses for 20 to 30 years into your retirement. Using a retirement calculator, you can calculate the amount you need to save up to maintain your life at the current standard. After you decide on the corpus you need to build, you can use an SIP return calculator to plan the amount of SIP you need to invest to build that corpus in the time that is left till your retirement.  
 
How does the retirement calculator work? 
 
Let us assume that you are 25 years old currently and your monthly expenses hover around Rs 30,000. How will you know the future projection of your current expenses at the time you retire? The retirement calculator is an online tool that helps you plan your investments so that your retirement corpus can be built based on proper calculations.   
 
Continuing ...
... the above example, let us say if you plan to retire at 60, the calculator will give you a result that your monthly expenses will be a little over Rs 3 lakhs at an assumed average rate of inflation of 6% per annum, if you maintain the same standard of living!  
 
For using the free retirement calculator, you need to choose it from an online platform, and input a few details like your current age, your life expectancy judging from genetical and present health conditions, your current monthly expenses, the percentage of your current expenses you will need upon retirement based on the number of your dependents, and the expected rate of returns on your investments. Once you furnish these details, the calculator will let you know two things: the amount you will need in your retirement to live the life you desire and the amount you will need to invest to reach that goal. 
 
How can an SIP in Mutual Funds help to build your retirement corpus? 
 
Once you determine how much you need to save as a retirement corpus, you need to then decide upon the avenues of investment which will get you to your target corpus. One such investment option is SIP in mutual funds.  
 
The Systematic investment plan or SIP allows you to invest a small amount of money in each period into a scheme of your choice as per your risk appetite. There are many options available in mutual funds. For determining how much to invest per SIP instalment, you can use a SIP calculator. 
 
How does an SIP calculator work? 
 
An SIP return calculator is an online tool that is available freely on most AMC websites. The calculator can give you the returns on your SIP investment with the help of a few details that you need to input. The details are: 
 

Your target corpus.  

The expected rate of return on your investments. 

The frequency of the contribution. 

The time horizon of your investment which is nothing, but the time left till your retirement. 

 
The moment you click on ‘calculate' after entering all the details, the SIP return calculator gives you the required result in a fraction of a second. Go ahead and use the two calculators to plan your retirement today since each day lost is an opportunity lost to start the journey towards financial freedom.  
 
 
 
Contact a mutual fund distributor or financial planner to help you choose the suitable tax saving mutual funds for you and avail of the dual benefits