Unfortunately there is, or at least can be, a big difference between:
“When I WANT to retire” and “When I CAN retire”
WANT is governed by job pressure, stress, burnout etc.
CAN is unfortunately governed by how one can save, inflation, interest rates, life expectancy
Find out when you CAN retire using the excel based calculator.
Using the calculator is pretty much self-explanatory. Some additional notes are given below:
Notes:
Financial instruments like EPF, NPS, PPF and long-term equity investments dont attract tax on maturity or withdrawal. If you build your retirement nest egg with these you dont have to pay tax
Estimated tax rate on your pension is calculated in the following way: Assume you earn Rs. 1 lakh a year and your monthly expenses are Rs. 30,000. Your taxable income them is Rs. 12 lakh (ignoring other sources and 80 C deductions for simplicity). The calculator calculates the tax payable per month if your monthly income = monthly expenses (that is Rs. 30,000). This will be typical situation when you retire. The pension you get will be predominantly used for expenses and not for investing. So it should be lower than or at best equal to the present tax payable per month for a monthly income of Rs. 30,000.
Do as directed in cell ‘C12’ until results are displayed.
The money flow chart worksheet gives a detailed view of how your corpus will grow year-on-year to retirement and deplete year0on-year after retirement.
If you wish to and if you can retire early at say, age 45, you should assume will live at least until 80. That is a good 35 years in retirement. You are not ready for retirement until and unless you have a corpus which will give a inflation-indexed (increase with inflation each year) pension for 35 years. Of course you can supplement it with part-time work, but it is best to not reply on this too much. If you do it will be come a full-time job before you know it.
Why did I do this calculator? I didn’t do this calculator for my use. I use the retirement calculator that is uploaded in the ‘Calculators Offered’ tab. This uses the same mathematics as the other retirement calculator with one important difference which interested me and may also interest students of finance. In a compound interest problem if the principle is fixed the period or time (in this case time to retirement) can be found out easily. If the principle varies (increase or decreases by a set rate) each year then the problem cannot be solved by algebra and therefore by excel. I have made a simple workaround in which the user iteratively arrives at the answer.
Use our Robo-advisory Tool to create a complete financial plan!More than 3,000 investors and advisors use this! Use the discount code robo25 for 20% off. Plan your retirement (early, normal, before, and after), plus non-recurring financial goals (such as child education) and recurring financial goals (such as holidays and appliance purchases). The tool helps anyone aged 18 to 80 plan for retirement, plus six non-recurring and four recurring financial goals, with a detailed cash flow summary.
Have a question? Subscribe to our newsletter using the form below.
Hit 'reply' to any email from us! We do not offer personalised investment advice. We can write a detailed article without mentioning your name if you have a generic question.
Our flagship course!Learn to manage your portfolio like a pro to achieve your goals regardless of market conditions! More than 3,500 investors and advisors are part of our exclusive community! Get clarity on how to plan for your goals and achieve the necessary corpus no matter the market conditions! Watch the first lecture for free! One-time payment! No recurring fees! Lifelong access to videos! Reduce fear, uncertainty and doubt while investing! Learn how to plan for your goals before and after retirement with confidence.Increase your income by getting people to pay for your skills!More than 900 salaried employees, entrepreneurs and financial advisors are part of our exclusive community! Learn how to get people to pay for your skills! Whether you are a professional or small business owner seeking more clients through online visibility, or a salaried individual looking for side or passive income, we will show you how to do it by showcasing your skills and building a community that trusts and pays you. (Watch the 1st lecture for free). One-time payment! No recurring fees! Lifelong access to videos!Our book for kids: “Chinchu Gets a Superpower!” is now available!Both the boy and girl versions of "Chinchu Gets a Superpower". Most investor problems stem from a lack of informed decision-making. We made bad decisions and money mistakes when we started earning, and we spent years undoing them. Why should our children go through the same pain? What is this book about? As parents, what if we had to groom one ability in our children that is key not only to money management and investing but to every aspect of life? My answer: Sound decision-making. So, in this book, we meet Chinchu, who is about to turn 10. The story follows what he wants for his birthday and how his parents plan it, while also teaching him key ideas about decision-making and money management. What readers say!Feedback from a young reader after reading Chinchu gets a Superpower!
Must-read book even for adults! This is something that every parent should teach their kids right from their young age. The importance of money management and decision making based on their wants and needs. Very nicely written in simple terms. - Arun.
Freefincal is a News Media organisation dedicated to providing original analysis, reports, reviews and insights on mutual funds, stocks, investing, retirement and personal finance developments. We do so without conflict of interest and bias. Follow us on Google News. Freefincal serves more than three million readers a year (5 million page views) with articles based only on factual information and detailed analysis by its authors. All statements made will be verified with credible and knowledgeable sources before publication. Freefincal does not publish paid articles, promotions, PR, satire or opinions without data. All opinions will be inferences backed by verifiable, reproducible evidence/data. Contact Information: To get in touch, please use our contact form. (Sponsored posts or paid collaborations will not be entertained.)
Published by CNBC TV18, this book helps you ask the right questions and find the right answers. It also includes nine online calculators, so you can create custom solutions tailored to your lifestyle. Get it now.
Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You Want
This book is designed to help young earners get the basics right from the start! It will also help you travel to exotic places at a low cost! Get it or gift it to a young earner.
Your Ultimate Guide to Travel
This is an in-depth exploration of vacation planning, including how to find affordable flights, budget accommodations, and practical travel tips. It also examines the benefits of travelling slowly, both financially and psychologically, with links to relevant web pages and guidance at every step. Get the PDF for Rs 300 (instant download)
Create a complete financial plan with our Robo-advisor!
Trusted by 3500+ investors and advisors! Use code robo25 for a 20% discount!
