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📊 Bonus: Retirement Calculator Example

Planning for retirement can feel overwhelming, but a simple calculator can make it easier. Here's how it works with a practical example:

🎯 Goal:

Retire at age 60 with a retirement corpus that lasts until age 85, providing ₹50,000/month (₹6,00,000/year) for living expenses.

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🔢 Step-by-Step Calculation:

1. Estimate Annual Expenses in Retirement

• Desired monthly income: ₹50,000

• Annual need: ₹50,000 × 12 = ₹6,00,000

2. Adjust for Inflation

• Assume inflation: 6% per year

• Years until retirement: 30 years (if currently age 30)

• Future annual expenses = ₹6,00,000 × (1.06)^30 ≈ ₹34,42,000/year

3. Retirement Corpus Needed

• Retirement duration: 85 – 60 = 25 years

• Expected return after retirement: 7% annually

• Use the Present Value of Annuity Formula:

  $$PV = PMT × \left(1 - (1 + r)^{-n}\right) / r$$

  Where:

  • PMT = ₹34,42,000/year

  • r = 7% = 0.07

  • n = 25 years

  $$PV ≈ ₹34,42,000 × 12.783 ≈ ₹4.4 crore$$

✅ So, you’ll need around ₹4.4 crore at age 60 to maintain your lifestyle.

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💰 How Much to Save Monthly?

To reach ₹4.4 crore in 30 years with an average return of 10%:

• Use Future Value of SIP formula:

  $$FV = P × \frac{(1 + r)^n - 1}{r}$$

  Rearranged to solve for P (monthly contribution):

  $$P = \frac{FV × r}{(1 + r)^n - 1}$$

• FV = ₹4.4 crore

• r = 10% annually = 0.00833 monthly

• n = 30 × 12 = 360 months

Result: You need to invest around ₹19,300/month for 30 years.

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🧠 Final Thoughts

• Start early: The sooner you begin, the less you need to save monthly.

• Increase your SIP as your income grows.

• Review your plan every 2–3 years or with major life changes.