How SIP calculator and retirement planning calculator helps plan finances?

Planning happens to be one of the most crucial elements when it comes to building a solid financial ground once you retire. When executed well in advance, retirement planning can help an investor become worry free and bank upon the corpus they have worked hard to create. One can have various financial goals during their working phase, but it is imperative to set aside savings for your retirement corpus as well. How much should you save, what can be expected from this corpus, tenure of investment – these are the few factors to be looked into. In order to navigate this, there are a few financial calculators like SIP Calculator and retirement planning calculator that can help.

Retirement Planning Calculator – This is an easy to use online financial calculator available for retail investors. As the name suggests, one can make a potential retirement plan with this tool and execute it with investments of their choice. First, depending on your lifestyle, income, tenure of investment, you need to decide the corpus required once you retire, in order to lead a comfortable life. Then, this tool will tell you how much to invest today for reaching this corpus systematically when you retire.

Let us understand the same with an example –

Suppose, Rajan 30 years old, need a retirement corpus of Rs 50 lakhs when he reaches age 60. Let us assume that he has no savings currently, inflation is 5% and the expected rate of return is annual 12%. Then, based on the calculations by the retirement planning calculator, Rajan finds that he should ideally be saving Rs. 6,662 per month over the next 30 years. With the power of compounding over a long period of time, Rajan’s savings can grow exponentially and yield the desired corpus for him.

The above calculation can also be done using a SIP calculator. A SIP calculator helps you plan any goal. All you have to input is, the current value of the goal, expected inflation. No. of years after which the goal amount is require and returns, that’s it.

Pension Plan calculator – This tool helps to understand the tentative pension (monthly income post retirement). Once you have accumulated a sizeable corpus, you can invest the same in a pension plan and draw annuity or invest in low risk mutual funds and draw regularly by way of SWP. In a pension plan calculator, if you input the lumpsum amount, expected returns and the regular withdrawal amount, it will display the period till which you can continue to withdraw the regular income. Based on these projections, you can plan your cash flow requirements during the retirement years.

SIP Calculator – This is the most commonly used financial calculator. SIP Calculator is mostly used to plan your predefined financial goals. You can plan SIP investments with a fixed amount which is surplus every month in your hand, or for a long term goal like child’s higher education or retirement etc. Based on your requirement, the correct inputs need to be given in order to get the desired outputs.

In this read, we discussed how online free financial calculators like SIP calculator or retirement planning calculator can help the investors.

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