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.