Believe it or not, but the most important phase of your life is undoubtedly the retirement age. As you age, you realize the significance of planning for your retirement and its corpus. The concept of annuity is associated with your retirement corpus. The prime focus of annuity is to serve as a steady flow of income, at the time of your retirement.
The best way to accumulate ample amount of retirement corpus is by not only planning but also investing in it early. To find out if you have enough sum for it, you can utilize a retirement calculator to know the future value of all your expenses. So if you’re someone who is wondering about how to use it, then go through the following steps:
What is a retirement calculator?
In order to live a carefree retirement life, you need to keep a track on your retirement funds. That’s when a retirement calculator comes into the picture. A tool that helps you to calculate the appropriate retirement corpus for you is known as the retirement calculator. Additionally, it delivers results wherein you can easily decide how much you should save up every month.
A retirement calculator is a valuable instrument. This is because it helps you to set boundaries on your financial plans which will eventually benefit you in the longer run. In order to make the right use of your retirement corpus, consider factors like your income, inflation, the growth rate of investment, and so forth.
Before you use a retirement calculator, it is necessary to fill in certain personal details asked by the company. Take a look at these points given below that form the basis of all your personal details:
- Age of retirement
- Return on investment
- Portfolio size
- Retirement expenses
- Life expectancy
Steps to calculate your retirement corpus:
Following the right procedure of using a calculator ensures the maximum level of accuracy in the calculations. If one stage goes wrong, your entire calculation goes tumbling down. Therefore, follow these steps given below in order to compute your corpus for the retirement:
Step 1: In order to earn from your retirement policy, make assumptions of your retirement age, your life expectancy, and rate of return. Once done, list all these points down in an excel sheet.
Step 2: Find out your monetary requirement per year in order to manage all your expenses after retirement. This can be possible only if you inflate your current annual expenses.
Step 3: With these 2 steps, you are absolutely ready to calculate your retirement corpus. The final sum that is shown on your calculator will eventually manage all your life goals of finance.
Once you are done using a retirement calculator, don’t keep it aside immediately. In order to learn more about it, play around with figures and assumptions to get your desired corpus amount. Later, save these calculations in an Excel sheet so that you can use it whenever and wherever, as per your wish.
Now that you know how to calculate your retirement corpus, sit down with your family and discuss your retirement phase with them. It is important to do so as retirement is the most crucial stage of your life. If you still need help in order to discuss in depth about your retirement investment plans, then take professional help or assistance.