SIP, One-time Investment for Retirement Planning: When you grow old or when you want to retire, your expenses won’t stop.
You will still be needing an amount for your daily expenses.
Since we can’t predict how long we will live, we don’t know for how long you may require that amount.
But at that stage, there are chances that you may not have a regular source of income.
Returns from investments may solve your problem in that case.
It may provide you lifelong passive income that may make your retirement life smooth.
Post retirement, even if you want to maintain the same lifestyle as you have today, you should know the amount that you may need in the form of a retirement corpus.
In this write-up, know what amount you may need at retirement and what can be your monthly and one-time investments to get Rs 80,000 monthly income at retirement if your age is 25, 30, 35, or 40 years.
How to know retirement corpus amount
It will depend on 3 factors—your current age, the age when you want to retire, and the number of years you want this amount for.
Based on 3 factors, you can calculate the inflation-adjusted corpus required in the first year of your retirement.
Taking that as the yearly payment, you calculate the retirement corpus required for the rest of the years.
Inflation and rate of return for retirement corpus
When you make an investment, it grows over time, but at the same time, inflation also jumps.
A thing that costs Rs 100 will cost much more at your retirement; you need to consider inflation as a factor when you are calculating your retirement corpus.
Instead of taking the rate of return, you need to calculate the corpus required on the basis of the real rate of return, where inflation will also be adjusted to the post-retirement investment returns.
Pre- and post-retirement returns
Pre-retirement investment returns should be enough to meet your retirement corpus target.
On the other hand, you can be conservative in your investments post retirement since at that stage, you can’t take much risk with your corpus.
Tax is important factor in retirement corpus building
Taxation rules keep changing all the time.
At the same time, interest rates of fixed asset investments also change.
So, when you are building a retirement corpus, it should be met after paying all taxes.
Calculation conditions for story
We will calculate the retirement corpus, monthly SIP, and one-time (lump sum) amount we need to get a Rs 80,000 monthly payout from the age of 60 till the expected life if our current age is 25, 30, 35, or 40 years.
Here are the comnditions for our calculations-
Retirement age- 60 years
Expected life- 80 years
Current monthly expenditure- Rs 80,000
Inflation rate- 6 per cent
Current retirement corpus- 0
Pre-retirement post-tax return- 12 per cent
Post-retirement post-tax return- 6 per cent
Retirement corpus required to get Rs 80,000/month for 25-year-old
Rs 14,75,72,880
Monthly SIP amount required to get Rs 80,000/month for 25-year-old
Rs 22,720
Lump sum amount required to get Rs 80,000/month for 25-year-old
Rs 27,94,962
Retirement corpus required to get Rs 80,000/month for 30-year-old
Rs 11,02,74,960
Monthly SIP amount required to get Rs 80,000/month for 30-year-old
Rs 31,240
Lump sum amount required to get Rs 80,000/month for 30-year-old
Rs 36,80,750
Retirement corpus required to get Rs 80,000/month for 35-year-old
Rs 8,24,04,000
Monthly SIP amount required to get Rs 80,000/month for 35-year-old
Rs 43,425
Lump sum amount required to get Rs 80,000/month for 35-year-old
Rs 48,47,276
Retirement corpus required to get Rs 80,000/month for 40-year-old
Rs 6,15,77,040
Monthly SIP amount required to get Rs 80,000/month for 40-year-old
Rs 61,630
Lump sum amount required to get Rs 80,000/month for 40-year-old
Rs 63,83,493
(Disclaimer: This is not investment advice. Do your own due diligence or consult an expert for financial planning.)
Source:https://www.zeebiz.com/personal-finance/news-sip-lump-sum-mutual-retirement-corpus-planning-calculator-want-to-get-inr-rs-80000-at-60-years-of-age-know-your-monthly-sip-and-one-time-investment-to-achieve-that-financial-goal-351047