Close

Buy a Life Insurance Plan in a few clicks

Now you can buy life insurance plan online.

Kotak e-Invest

Insurance and Investment in one plan.

Kotak e-Term

Protect your family's financial future.

Kotak Guaranteed Fortune Builder

A plan that offers guaranteed income for your future goals.

Kotak T.U.L.I.P

A plan that works like a term plan, and Earns like ULIP Plan.

Kotak Assured Savings Plan

A plan that offer guaranteed returns and financial protection for your family.

Kotak Assured Pension

A plan that offers immediate or deferred stream of income

Kotak Lifetime Income Plan

Retirement years are the golden years of life.

Kotak Guaranteed Savings Plan

A plan that offers long term savings and life cover.

Close

Get a Call

Enter your contact details below and we will get in touch with you at the earliest.

  • Select your Query

Thank you

Our representative will get in touch with you at the earliest.

10 Steps to Figure Out How Much Money You Will Need For Your Post Retirement Plans

It is essential to begin your retirement planning as you start earning to ensure no financial worries later on. Let's discuss 10 ways to calculate your post retirement plans.

  • 2,789 Views | Updated on: Jan 15, 2024

Retirement is supposed to be a time of tranquillity and responsibility-free living. It is essential to start retirement planning as soon as you start earning to ensure no financial worries later on. The challenge is to figure out how much money you will need for a comfortable life after retirement. It is a common notion that retirement planning is a complicated matter, but it isn’t.

Let’s discuss ten ways to calculate post-retirement corpus.

1. Decide Retirement Age

Although the most prevalent age to retire in India is 60, many people want to retire early so they may pursue a hobby, travel the globe, or do volunteer work. Determining the retirement age will assist in figuring out how much money will be needed to retire comfortably.

Pro Tip: It is advisable to consider life expectancy while deciding the retirement age and money needed at the time of retirement.

2. Calculate Monthly Expense After Retirement

Making a list of monthly expenses after retirement is the first step. The most usual expenses are

  • Grocery bills
  • Utility bills
  • House maintenance
  • Travelling

Pro Tip: Don’t forget to factor in inflation while calculating expense post-retirement.

3. Calculate Monthly Income After Retirement

The second step is to calculate monthly income after retirement. It could be

  • Pension from company
  • Pension from EPF
  • Income from a pension policy

Pro Tip: Any rental income must be calculated according to the estimated value post-retirement.

4. Calculate Net Income Required

The net income required is calculated by deducting monthly expenditure from monthly income.

Pro Tip: If monthly expenditure is Rs. 50,000 and monthly income is Rs. 30,000, then net income required is Rs. 20,000.

5. Calculate Future Value of Required Income

Everyone has the option of retiring at a different age- the additional income required must be calculated according to inflation at that time.

Pro Tip: Experts advise using 6% inflation, the average of the past 10 years, in calculations.

6. Calculate Retirement Corpus

The total amount of money accessible at retirement is referred to as the retirement corpus. Since life expectancy is constantly increasing, it might be a bit tricky to calculate the retirement corpus. Retirement planning, according to experts, should be done until the age of 90.

Pro Tip: Since the retirement corpus must last 25-30 years after retirement, it is best to allocate a portion of the assets towards equity growth.

7. Track and Review the Plan

Once the retirement plan is put into action, it is important to review it periodically. If there are any sudden changes in the financial situation, they must be factored into the plan and adjusted accordingly.

Pro Tip: At least once a year, the retirement plan should be examined to see if it is on track to fulfil the goal.

8. Calculate Current Corpus

The majority of people would have also built up a retirement fund through various financial instruments. Add them all together to find out how much money you have set up for retirement.

The different instruments are

  • PDF
  • PDF
  • NPS
  • Pension plans
  • Insurance policies

Pro Tip: Begin investing as soon as possible. Compounding is a powerful tool that should not be overlooked.

9. Calculate the Additional Corpus Required

To determine how much extra corpus is needed to accomplish the retirement target, subtract step 6 from step 8.

Pro Tip: Remember that these are estimates that are modified for inflation in the future. Taking the worse numbers will aid in better planning.

10. Calculate Additional Monthly Saving to Meet Additional Corpus

Don’t be alarmed if the computations yield a large figure. People who begin investing at an early age will have a long time to accumulate the required retirement fund.

Pro Tip: Keep your financial knowledge up to date. It will go a long way towards establishing the necessary retirement corpus.

Striking a balance between reasonable return expectations and a desired level of living is one of the most difficult components of building a thorough retirement plan. Focus on building a flexible portfolio that you can modify frequently to reflect changing market circumstances and retirement goals.

- A Consumer Education Initiative series by Kotak Life

Amit Raje
Written By :
Amit Raje

Amit Raje is an experienced marketer who has worked in various Fintechs and leading Financial companies in India. With focused experience in Digital, Amit has pioneered multiple digital commerce in India. Now, close to two decades later, he is the vice president and head of the D2C business department. He masters the skill of strategic management, also being certified in it from IIMA. He has challenged his challenges and contributed his efforts in this journey of digital transformation.

Amit Raje
Reviewed By :
Prasad Pimple

Prasad Pimple has a decade-long experience in the Life insurance sector and as EVP, Kotak Life heads Digital Business. He is responsible for developing user friendly product journeys, creating consumer awareness and helping consumers in identifying need for life insurance solutions. He has 20+ years of experience in creating and building business verticals across Insurance, Telecom and Banking sectors