Step 4: Find out if your savings can cater to your post-retirement expenses
The next step is to determine if your retirement corpus is sizeable enough to take care of your post-retirement expenses.
For example, assume that on retirement, you have a kitty of Rs 9,834,700 to generate a post-retirement income; furthermore, let's assume that the retirement corpus is invested in an avenue that earns an annual return of 10% (the return will vary depending on the investment avenue chosen).
So, at the end of every year, you will receive an income of Rs 983,470 from your investment. This is your post-retirement income from your investments.
If your post-retirement income is higher than your post-retirement expenses then your savings/investments are enough to cater to your post-retirement needs. But if they are lower, then you will have to work towards plugging this shortfall.
Image: Must have a safe nest-egg! Gold bullion is displayed at Shinhan Bank in Seoul. | Photograph: Jung Yeon-Je/AFP/Getty Images
Also read: How to achieve financial nirvana in 5 steps
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