5 ways to make your retirement plan better with a pension calculator

Posted on 05/16/2016 ~ Categorized as Retire
5 ways to make your retirement plan better with a pension calculator

Financial planning for post-retirement life is absolutely necessary if you want to maintain the standard of living and at the same time remain financially independent in your golden years.  There are many young people who think that planning for retirement is no big deal. Besides, there is still a lot of time to think about retirement.  It is only on the verge of retirement when they realize what mistakes they have made.

There are a number of factors that may impact your retirement planning in absolute term. The factors include growth of economy, job security, returns from investments, financial responsibilities towards family, rising medical expenses and most importantly inflation. All these make your retirement planning more difficult than you think.

Yes, retirement planning is difficult! It requires a clever and systematic financial planning that takes into account all the social and economic factors that may impact your life post-retirement.   Moreover, it involves heavy number crunching.  Hence, it is always better to take help when it comes to a long term financial planning like this.

A pension calculator is the most helpful tool to make your retirement planning easier.  It is a calculating device available online.  It is free, easy to use and gives quick results. The accuracy of the results it produces largely depends on the accuracy of the information you provided. The best part of a pension calculator is that it takes into account the current inflation rate while calculating. On the websites of any reputed insurance provider, you will find a retirement planner to calculate the retirement corpus you need to build for maintaining your living standard. You can also find a good pension calculator on the website of policybazaar.com.

You need to provide a few pieces of information like your date of birth, your annual income, your expected retirement age etc., and based on your information, a pension calculator will display the amount of money you need to have by the time of you retirement. It will show you how much money you will need as your monthly pension post retirement. It will also tell you how much you need to invest in order to build the required retirement corpus.

Now that you understand what a pension calculator is, where to find it and how to use it, here you will learn how this little online tool can help you do a better financial planning for your golden years.

No more procrastination

You have always understood the importance of financial planning for retirement.  You also knew how important it is to start planning for retirement at an early age. But every time you thought of actually doing it, you always ended up postponing the task.  It may be due to the thought of heavy number crunching or due to lack of time that always made you procrastinate your retirement planning.  Whatever the reason was, but now it will no more come in the way of your financial planning.  With the help of a pension calculator, you will be able to calculate your post-retirement requirements anytime and anywhere you want.  A pension calculator is the best way to kick-start your financial planning for retirement.

Creating your retirement roadmap

Once you know, with the help of a pension calculator, how much you need to save or invest in order to maintain your living standard in your post-employment life; it is now time to create a roadmap for your retirement.  You need to plan on your future goals based on your financial boundaries. What your ambitions in life are and how much money you would require to achieve them, should be made clear in your mind. You should also plan for your post-retirement life.  The best way to map your retirement is by visualizing your post-retirement years as this will give you an idea how you can be prepared.

Planning is not enough

Based on the estimated results of the pension calculator you should start your retirement planning seriously. However, just planning is not enough. You need to actively take part and materialize your planning as soon as possible. You need to plan where you should save and invest your hard earned money so that they give a sizeable return in the future. You have to do extensive research on various investment instruments and start investing your money as early as possible. You can open an SIP account and start investing in mutual funds or directly invest in stock markets based on your investment strategies.

Diversify your savings and investments

The estimates made by pension calculators are based on your current income and savings.  Now that you are quite ambitious about your future, you should diversify your savings and investments in order to build a large retirement corpus. You already have an EPF (Employees’ Provident Fund) Account opened by your employer.  The power of compounding will result in a huge corpus when you retire. But an EPF account is not enough. In order to keep the effect of inflation at bay, you need to invest your money in various market-linked instruments. You can invest in mutual funds for future wealth creation or you can buy a pension plan from a reputed insurance company. There are a number of insurance providers in India that offer pension plans. A pension plan helps to maintain the regular flow of income even after your retirement. It also gives comprehensive life cover so that in case of your death your family receives a guaranteed lump sum amount from the insurer.

Borrowing is better than withdrawing

No matter how great an emergency arises, you should never withdraw from your retirement corpus.  Many pension plans allow you to withdraw the policy after five years from the commencement of the plan. But you should never be lured by the easy availability of extra money. If it is a case of real emergency it is better to borrow the required amount for the time being and pay off all the debts before you retire.  The best option is to have a health insurance plan to deal with sudden medical emergencies and also a child insurance plan to take care of the various needs of your child. These plans will save your retirement fund from untimely withdrawals.

You should Use Pension calculator from time to time in order to remind yourself the amount of money you need to save every month and the amount of money you need to accumulate for your retirement.


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