SIP Calculator: A retirement calculator is a valuable tool for determining the monthly savings required to build a sufficient corpus for a comfortable retirement. By establishing your retirement needs, the calculator can indicate the necessary savings to achieve your financial goals.

This process involves calculations based on an anticipated growth rate and the timeline for your retirement. Starting your savings early can significantly reduce the amount you need to save each month. However, if you are a young individual aiming for a retirement target of Rs 1 crore or Rs 2 crore, it may be prudent to increase your savings goal.

With an assumed annual inflation rate of 5 percent, the future value of Rs 1 crore and Rs 2 crore will diminish to approximately Rs 38 lakh and Rs 30 lakh, respectively, after 20 and 25 years. Various crorepati calculators are available to assist you in determining the appropriate savings amount needed to reach targets of Rs 3 crore or even Rs 5 crore, adjusted for inflation.

Also Read: NPS Calculator: How much should a 30 year old invest for monthly pension of Rs 2 lakh?

To illustrate, let us examine the monthly savings required to accumulate Rs 5 crore over different time-frames, assuming a growth rate of 12 percent per annum:

* To achieve Rs 5 crore in 20 years, a monthly saving of Rs 50,000 is necessary.

* For a 25-year horizon, the required monthly saving is Rs 26,500.

* If the goal is to reach Rs 5 crore in 30 years, a monthly saving of Rs 14,250 will suffice.

Thus, by consistently saving Rs 50,000, Rs 26,500 or Rs 14,500 each month, one can potentially accumulate nearly Rs 5 crore over 20, 25, or 30 years, assuming an annualized return of 12 percent.

It may be noted that Nifty Index Funds have delivered an annual return of 18% over the last 5 years, while Multi Cap Mutual Funds have delivered over 25% CAGR over the last 5 years. Many other equity mutual fund schemes have also performed well.

Systematic Investment Plan

To facilitate your retirement savings, consider initiating a Systematic Investment Plan (SIP) in equity mutual fund schemes, allowing for regular contributions. In the event of a significant market downturn, it may be advantageous to increase your investment in the same mutual fund to take advantage of lower net asset values.

Depending on market conditions, you can utilize both SIP and lump-sum investment strategies. Additionally, a step-up SIP can be employed, where you begin with a fixed monthly contribution and gradually increase the amount by a predetermined percentage.