Step 3: Get a check on your annual savings and find their future value
How much you are able to save every year (after meeting all your expenses), plays a crucial role in building your retirement corpus. The ideal way is to earmark a portion of your savings towards retirement. This part of your saving should be treated as sacred and should not be disturbed unless it is very urgent.
After estimating how much amount you will be able to save annually towards your retirement corpus, the next step is to find out its future value. To determine this, you need to factor in the expected rate of return on your investment. This is the value of your savings or investments at the time of retirement.
For instance, if you are able to save Rs 100,000 annually for your retirement, and you invest this amount in an avenue, which earns you a 10% return per annum, then after 25 years (which is the number of years left for retirement), you will have a retirement corpus of approximately Rs 9,834,700.
Image: Cash matters! An Indian bank employee counts rupee currency notes in Mumbai. | Photograph: Indranil Mukherjee/AFP/Getty Images
Also read: 'Hillary, Obama, McCain want more H-1B visas'
Advertisement
