Distribution of wealth or pension is calculated on the basis of an estimate of expenses you will incur on a regular basis once you retire from paid work. Retirement calculator takes into consideration current age, expected retirement age, current income and savings details. This enables it to get an estimate of the savings you will accumulate once you opt for retirement. It will also be able to tell you whether it will be enough to cover your expenses in your golden years. Based on these details, the 2nd part of calculation will make an assessment about your estimated monthly expenses after your retirement taking into account the estimated inflation.

The amount of money needed to retire differs from person to person.
You can know how much money you will need to retire by

• Calculating how much your expenses will be once you retire
• Your post-retirement plans like traveling around the world or taking up a sport, a hobby etc
• The number of dependents on you whom you need to support financially
• Unforeseen expenses that can crop up in old age

The money you need to retire is a corpus that takes care of regular needs plus unforeseen expenses.

The factors you should consider when planning for retirement are

• Identify your financial and retirement goals
• Correctly assess your current financial situation
• Plan a sound investment allocation strategy
• Take factors like longevity, inflation and unforeseen & medical expenses into consideration

Taking these factors into account, you can then decide the age you should retire. Early retirement is a desirable goal, but it can be achieved only if you have invested and saved substantially during the early part of your career.