What is a pension calculator?
A pension calculator helps you estimate how much corpus you will accumulate by retirement and what monthly pension you can expect from it. By entering your current age, target retirement age, monthly savings, existing corpus, and expected return rate, you can see a year-by-year projection of your retirement corpus growth.
This calculator also tells you whether your projected monthly pension meets your desired pension goal. If there is a shortfall, you can adjust your monthly savings, increase your annual increment, or extend your retirement age to bridge the gap.
How this pension calculator helps you
Key assumptions explained
Annuity ratio (40%): At retirement, you invest a portion of your corpus in an annuity plan that provides a guaranteed monthly pension. NPS rules require 40% of the corpus to be used for annuity. This calculator lets you adjust this ratio from 20% to 60%.
Annuity rate (6%): The rate at which your annuity investment generates monthly income. Current annuity rates in India range from 5-7%. A higher annuity rate means higher monthly pension.
Annual increment (10%): This assumes you increase your monthly contribution by 10% every year, reflecting expected salary growth. If you don't plan to increase contributions, set this to 0%.
Return on investment (10%): The expected annual return on your retirement corpus before retirement. A moderate equity-heavy portfolio can reasonably expect 10-12% over the long term in India.