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Retirement Planning Calculator – Plan Your Savings

Retirement Planning Calculator

Living a comfortable life post-retirement is something many people dream of. However, if you want to lead a safe and financially secure life in your older days, you need to start planning now. You are never too young for retirement planning. The earlier you start, the better your chances of saving more for the rainy days. That’s where the retirement planning calculator comes handy.

Employees, businesspersons, freelancers, and workers- everyone needs to plan for their retirement. In fact, workers and helpers from the unorganized sector and informal workers from organized sectors are more vulnerable due to the nature of their job. They need a concrete retirement plan for the future. Online tools and apps like TankhaPay will help employers manage social security and EPF funds of their informal employees and establish a proper retirement plan.

What is Retirement Planning?

Retirement planning is the process of saving funds over the years to have enough money to pay for your expenses when you stop working due to old age. Salaried employees, self-employed, business persons, and informal workers (like house and office help, etc.) should start planning their finances from the day they receive their first salary or income.

In simpler words, retirement planning is an estimate of how much money you will need to spend the rest of your older days once you stop working. Since you will not have direct earnings through a job, you should have alternative income sources (PF pension, bank interest, etc.) to pay for your expenses.

Here, you should consider various factors like your age, type of job, career opportunities, inflation, risk appetite, tax efficiency, types of financial instruments, range of returns, and so on.

Do’s and Don’ts of Retirement Planning 

  • Always consider inflation for the future when using a retirement planning calculator. What costs Rs. 100/- today might cost Rs. 1000/- by the time you retire. The average inflation rate in India is between 3% and 15%.
  • Build a diverse financial portfolio by investing in different instruments, schemes, and policies. PF and ESI are a must for organized and unorganized workers.
  • Consider the liquidity rate and have cash at hand, especially when you retire. Make sure that you don’t have to touch the principal amount but get enough funds from the interests and returns.
  • Increase your savings as your income increases. This will help you add more funds to the principal amount for the post-retirement period.
  • You should continue to invest in your retirement plan until you retire. It is an ongoing process. Manage your current finances accordingly and spend wisely.
  • Don’t make any major financial decisions unless absolutely necessary. Even if you have a high-risk appetite, take calculated risks to protect your funds.
  • Don’t dip into emergency funds for routine expenses. These funds are only meant for emergencies and should be treated as such. Financial discipline is vital.
  • Consider health ailments and concerns when planning for retirement. Medical expenses can drain your funds quickly if you don’t have alternative sources.
  • Invest in government schemes and insurance plans, like EPF, that provide tax benefits. Start saving money as early as you can and continue even when your responsibilities increase.
  • Talk to a professional or use a trustworthy app like TankhaPay to help your informal workers manage their finances. This app is particularly useful to provide EPF coverage for office and household workers, construction laborers, apprentices, domestic help, etc., who are not normally covered by the schemes.

What is a Retirement Planning Calculator?

A retirement planning calculator is an online tool that helps you get an estimate of how much money you need for a stress-free post-retirement life. The online tool will use your input data to calculate how much money you should save per month to reach your retirement goals.

Though the retirement planning calculator deals with financial planning, it gives you insights into personal planning as well. For example, you have to decide how you want to live a post-retirement life.

Relax and Enjoy

For this, you need to save more and have definite monthly income sources after retirement. You will need even more funds if you wish to travel or lead a lavish lifestyle.

Work Part-Time

If you want to continue working part-time post-retirement, you can save slightly smaller amounts but should also have enough funds to support your lifestyle if you can’t find a job easily.

Work Full Time

Do you want to work post-retirement? You will still need retirement planning. Your work efficiency will reduce as you get older. Having a proper plan will ensure that you can choose to work or not work depending on other constraints.

The retirement planning calculator will allow you to get an estimate and make the right decisions for your future.

Retirement Planning Calculator

The retirement planning calculator has multiple elements, such as: 

  • Your Current Age
  • Expected Retirement Age
  • Life Expectancy
  • Current Monthly Expenses
  • Inflation
  • Current Savings (if you have any)
  • Expected Post-Retirement Monthly Income
  • Types of Savings/ Investments (Safe vs. Aggressive)

The terminology will be different for different online retirement planning calculators. However, they serve the same purpose of helping you plan your finances in the long term. Employers can encourage their informal workers to start their retirement planning by providing ESI and EPF coverage through the TankhaPay app.

How to Use the Retirement Planning Calculator?

It is easy to use the retirement planning calculator tool to plan your finances. The best part is that you can use it countless times to get estimates for varying input parameters. This will help you compare the future expenses and current savings required to achieve your retirement goals.

Provide the input details for each field. The retirement funds vary from person to person. That’s why the online tool uses your input data to create an estimate for you.

Enter Current Age

Your current age is one of the determining factors for retirement planning. A young person (aged less than 30) can have an aggressive and risky portfolio compared to a middle-aged person (around 45 years). That’s because a young person has more time to retire and can sustain market volatility in the long term,

Enter Retirement Age

By when do you want to retire? Will you stick to the standard 60-years retirement age, or do you want to retire at a different age? Early retirement implies a need for greater savings and vice versa. The retirement planning calculator uses the gap between your current age and your expected retirement age to recommend a savings plan.

Life Span/ Expectancy

We cannot be sure how long we will live. However, you can provide a rough estimate to calculate how much you should save for the future. For example, if you enter a life expectancy of 85 years and want to retire at 60 years, the retirement planning calculator will determine how much money you need to live those 25 years (85-60=25) comfortably. The trick here is to add a higher life span/ expectancy to be on the safe side.

Current Salary/ Expenses

How much do you earn and spend at this point in your life? This figure will be used to estimate the amount needed to live a stress-free post-retirement life. Some retirement planning calculators ask you to enter the inflation value, while some add it automatically. With some tools, you can choose the type of lifestyle you want to lead post-retirement.

Type of Investment

This feature allows you to calculate your retirement funds based on your expected financial portfolio. The returns for safe investments (FDs, PF, etc.) will be different from the returns provided by aggressive options (equity, mutual funds, shares, etc.). Generally, high risk equates to high rewards. However, risk appetite is subjective and changes from one person to another.

The retirement planning calculator will automatically provide an estimate of how much funds you need to plan your retirement after you enter the input data. There is no need to use any formulas from your side.

Benefits of Using a Retirement Planning Calculator

The online retirement planning calculator offers many benefits, such as the following:

Better Planning

You need concrete data to plan for your retirement. This can be provided by the retirement planning calculator tool. It assists in arriving at an approximate amount you need to spend your post-retirement days comfortably. This helps in planning your career to achieve the goal. A tangible target is always easier to deal with.

Accurate Estimate

The formula for calculating retirement funds can be tricky. Inflation makes it even messier. However, the retirement planning calculator doesn’t make mistakes as humans do. If you enter the correct input details, the estimate will be fairly accurate.

Instant Results

The retirement planning calculator delivers instant results after entering the input. The online tool is free to use and doesn’t require any payments. If you don’t want to consult a financial advisor yet, you can use the tool to generate estimates on your own.

Portfolio Options

The tool also provides a few investment options to try. You can calculate the returns without actually putting your money in any scheme. In a way, the retirement planning calculator empowers you to learn and understand your finances.

Countless Estimates

Generate as many estimates as you want and compare them to get the bigger picture. That way, you can consider all your options and make the final decision. Even after you start saving for retirement, you can continue to use the tool periodically to check if you are on track.

Ease of Use

The online tool is easy to use with self-explanatory field names. Anyone with basic computer skills (or someone who uses a smartphone) can generate the retirement planning estimate on their own.

Why Employees from Unorganized Sector Need Retirement Planning

People in informal employment have to be even more diligent about retirement planning. The nature of these jobs doesn’t always allow workers to retire with enough funds to safeguard their older days. For example, domestic help, courier persons, construction workers, care givers, cleaners, assistants, etc., come under the informal workers category and don’t have the same job benefits as others do.

In recent times, employers have begun to set up provisions to provide PF and social security. Working in the informal sector can take a toll on the body and mind. It is vital to start saving for the times when the person no longer has the strength to work for a living.

Employers need to take care of their workers by providing them with means to benefit from government’s social security schemes. EPF is one of the trusted government schemes for workers in India. The Employees’ Provident Fund helps save for retirement through contributions from both parties (employer and employee).

The monthly contributions accumulate and generate interest over time. The worker will have a lump sum amount in their account by the time they reach the retirement age.

The TankhaPay app allows employers to help all their employees, including informal employees, to start saving from the earliest days and be financially secure by the time they reach retirement age. How so? Workers can get access to EPF and benefits from other social security schemes through the app. TankhaPay empowers employers to manage their workers’ salaries, social security and EPF payments, attendance, etc., from a single interface.

Conclusion

Retirement planning is essential for everyone, irrespective of their employment nature, age, gender, and qualifications. Informal workers don’t have to stay behind or lead uncertain lives. Their future is in your hands. Help them secure it with a comprehensive retirement plan.

Use the TankhaPay app to register and make your workers eligible for social security benefits and become financially independent and secure.

FAQs on Retirement Planning Calculator

The life expectancy field denotes the approximate number of years you intend to live. The total retirement fund is calculated based on how many years you will live post-retirement. It will help you correctly estimate how much money to save to lead a comfortable life after retirement.

Download the app now.
   

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