Planning for retirement using spreadsheet – BEWARE OF PENSION FUNDS

6 Mar

What is your today’s monthly expense?
Answer: 25000 per month
How much you need per month on 25th year from now, when you retire?

Type the following formula in your favourite spreadsheet software.
=FV(0.1, 25, 0, 25000)
It evaluates to “270867.65” per month i.e 32,50,411.78 lakhs per annum.

Let us say we get around 10% per annum for FD to get 32.5 lakh interest you need 3.2 crores.

Now how much you need to save per month to get 3.2 crores upon retirement.

Type the following formula in your favorite spreadsheet software.
=PMT(0.15/12, 25*12, 0, 32000000)
It evaluates to “9865.8” per month on an investment that would give 15% per annum.

BEWARE of pension funds which promise 25000 Per month pension 25 years from now. Which in today’s cost would have a purchasing power of 2300 Rs(assuming 10% inflation).

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