Retirement planning is essential for all of us, regardless of our age. Even if your earnings are low and saving is a challenge, it is important to invest whatever you can to secure your future. A small amount can make a significant difference, as you will discover in this article. Therefore, let’s find out how a monthly investment of just Rs 5,000 in a systematic investment plan (SIP) can generate a sizeable retirement corpus of Rs 2 crore.
What is Retirement planning?
Retirement planning is preparing for your financial needs when you stop working. It’s about thinking about what you want to achieve financially in the long run, understanding how much risk you are willing to take with your money, managing your investments wisely, and protecting your money and income. By planning ahead, you can enjoy your retirement without worrying about money, pursue your passions, and live life on your terms. The earlier you start planning, the better off you’ll be.
Why plan for retirement?
- To maintain your standard of living post-retirement
- To fulfil retirement goals
- Be emergency ready
How can you plan for retirement?
- Start by evaluating your current income, expenses, savings, and investments.
- Set retirement goals
- Start early and save regularly
- Choose a suitable retirement plan
Retirement planning calculation conditions
- Target corpus: Rs 2 crore
- Monthly investment: Rs 5,000
- Annualised return: 12 per cent
What will be your retirement corpus in 10 years with Rs 5,000 monthly investment?
The investment amount will be Rs 6,00,000, the estimated capital gains will be Rs 5,20,179, and the estimated retirement corpus in 10 years will be Rs 11,20,179.
What will be your retirement corpus in 20 years with Rs 5,000 monthly investment?
The investment amount will be Rs 12,00,000, the estimated capital gains will be Rs 33,99,287, and the estimated retirement corpus in 20 years will be Rs 45,99,287.
What will be your retirement corpus in 33 years with Rs 5,000 monthly investment?
The investment amount will be Rs 19,80,000, the estimated capital gains will be Rs 1,98,78,124, and the estimated retirement corpus in 20 years will be Rs 2,18,58,124.
How long it will take to achieve the target of Rs 2 crore retirement corpus with Rs 5,000 monthly investment?
It will take approximately 33 years to achieve this target. If you start investing at the age of 20, by the time you turn 53, you will have generated a retirement corpus of Rs 2 crore. Even if you start later, at the age of 25, by the time you turn 58, you will still reach this target.
(Disclaimer: Our calculations are projections and not investment advice. Do your due diligence or consult an expert for financial planning)
