Retirement planning: Planning for the purpose
of achieving financial independence after retirement. Pension: Regular income
to the individual after retirement.
Retirement planning requires three basic
steps:
1. Determine how much annual income will be
needed in each year of retirement.
2. Determine how much corpus must be
accumulated in retirement savings by the start of retirement in order to fund
the expenditure during retired years.
3.
Determine how much must be contributed to retirement savings in each working
year remaining in order to accumulate the required amount determined in step
#2.