Have You Calculated How Much Money You Should Have Before You Retire?


If you’ve been taking retirement planning lightly, here’s something that could make you take heed. India has the lowest ranking among a group of 43 nations in an index attempting to measure post-retirement lifestyle. The 2017 Global Retirement Index, developed by Natixis Global Asset Management, bases the rankings on measures such material means to live a comfortable life post retirement, access to financial services that preserve the value of savings and access to quality healthcare facilities.

For those of us trying to take comfort from thinking that India’s ranking is low because comparisons are being made with developed nations, here’s the bad news. India has ranked the lowest among the BRIC nations. If you haven’t already reached out for a retirement calculator, the time to do so is NOW.

How Much Money Will I Need Post Retirement?

It’s important to be financially independent post retirement. Here are the three most important factors to consider when determining the amount of money you’ll need post retirement:

  1. Inflation: This lowers the value of money, over time. So, the basket of goods and services that you can purchase with say ₹10,000 today will need you to spend much more a few years later. When considering how much money you’ll need per month post-retirement, remember to factor in inflation.
  2. Lifestyle: Consider the lifestyle you wish to have post retirement. This should include basic necessities as well as some luxury spends, like travelling abroad or taking a club membership.
  3. Healthcare: Not only will healthcare be more expensive, but it’s safe to assume that your need for medicines and doctor’s visits will increase as you age.

Use a pension plan calculator to make the projections for you. The calculator gives you the amount after adjusting for inflation.

Other Factors to Consider

The corpus of funds you’ll need post retirement needs to be evaluated against the amount of money you can set aside today. Thus, the other two factors to consider when retirement planning are:

  1. Current Income and Expenses: Make a list of inflows and outflows to determine the amount of funds you can currently afford to set aside for your golden years.
  2. Tax Savings: Remember that you’ll get tax benefits for investing into your future.

A retirement planning calculator can help project the required amount, taking into account all the factors, including your current age, estimated retirement age, monthly income and expenses, inflation and financial goals.

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