Retirement Calculation Formula: Provident Fund, an investment scheme run by EPFO, is one of the first choices for creating a retirement fund. In this scheme, some part of the salary of the salaried employee goes every month and the company also contributes the same. Out of the employer’s contribution, 3.67% goes to the Employee Provident Fund (EPF) and 8.33% to the Employee Pension Scheme (EPS), making the employee more prepared. It offers the benefit of EDLI (Employee’ Deposit Linked Insurance), under which the PF member’s nominee gets an insurance benefit of up to 7 lakh on the untimely death of the PF member.
Probable retirement plan
In this write-up, we project the retirement corpus for a 40-year-old person, whose monthly expenditure is Rs 50,000, has Rs 10 lakh current accumulated corpus. Let’s say you started a job at 23 and retire at 58. That is, the duration of your job is 35 years. The maximum pensionable salary under the old pension scheme is Rs 50000. The pensionable salary of any employee for the last 60 months before exiting EPS is his/her average monthly salary.
SIP Investment
Considering that even if the person retires at the age of 60, he will not have any liabilities or major financial obligations like child’s education or marriage expenses, then the calculation changes. It is important to look at retirement planning at the age of 60 with an inflation rate of 6 percent. For an individual with these parameters, the retirement fund required at the age of 60 years would be around Rs 4,21,74,937, with an estimated annual expense of Rs 19,24,281.
Retirement calculation formula
FV = PV (1+r)n
Variable in the formula are-
FV- Future Value
PV- Present Value
r- expected inflation
n- time left until retirement (retirement age-current age)
In this way you can calculate your after retirement plan easily. You need to put your income, monthly expenses, time before retirement etc. to calculate about retirement plans.