Do not let a retirement calculator get you down!

Published: February 9, 2015 at 11:12 am

Last Updated on August 30, 2021 at 3:43 pm

If you have used a retirement calculator, you will know exactly what the title refers to! If you have not used a retirement calculator before, you are missing out on a wonderful opportunity to get all stressed up!

Freefincal has its origins in retirement calculators. I have a wide range of sheets, the most popular of which is the recently released: Low-stress retirement calculator!

Unfortunately, many still find this stressful enough:

  • They feel that the corpus required for financial independence in retirement is unbelievably high.
  • The monthly investment required, even if we assume investments will increase in the future, is still too high.

So many have asked me, “what should I do?“, “Does this mean I can never retire?“, “Should I increase my equity exposure?“, “Should I reduce inflation and increase return expectation” and the like.


Join over 32,000 readers and get free money management solutions delivered to your inbox! Subscribe to get posts via email!
🔥Enjoy massive discounts on our robo-advisory tool & courses! 🔥

You are not alone. After I made my first retirement calculator, I punched in my numbers and was in utter dismay. I sent it to Subra, who said, “yeah! That sounds about right!”. I started taking my retirement seriously that very day. Although I could not invest as much as I should, when I began, I soon was able to overtake my target, thanks to a combination of higher income and frugal living.

If you have same issues, here is what I think you should do:

Recognise the purpose of a retirement calculator

It is meant to shock you! It is meant to urge you to take your retirement seriously. If someone said. “invest as much as possible for retirement”, without using illustrations from a retirement calculator (such as this slide show), most people will not take it seriously.

Inflation before and after retirement is important to consider but is not the enemy. The enemy is reckless enhancement of living style (aka lifestyle creep).

So a retirement calculator, urges people (who bother to try one and  take results seriously) to reduce unnecessary expenses and invest in productive assets like equity.

At any point in life, all we can do is to invest what we can irrespective what we should. A retirement calculator is an instrument that is meant to prod you in the right direction.

Living in the moment is important but cannot come at the cost of destroying the future.

What should I do if I cannot invest enough?

You cannot invest enough today, not forever. So don’t lose heart.

Ask yourself, why?

Is it because you are spending too much?

If this is because of mandatory expenses, there is not much you can do.  See if you can increase your income soon.

If this is because you are making frivolous expenses, the solution is obvious.

 Is it because of liabilities?

If it is any loan other than a home loan, get rid of it asap.

If it is a home loan, there is no burning hurry to get rid of it, unless you want to retire early. If you invest right, your investments could earn more than the home loan rate.

Check out an illustration here: Prepay vs. invest

Use this calculator to find out for yourself.

There is no need to take an either/or stand. Begin investments and prepay in chunks. Recognise the time lost in pre-paying is more important than the psychological burden of a home loan.

Note to those who are thinking about taking a home loan: Factor in the rate at which your salary will grow. If it will only grow at a constant but steady rate (like for govt employees) or if it is likely to be volatile, try to avail a loan for only 50-60% of the real estate value.

Is it because you are not earning enough?

This means your expenses and/liabilities are too high.  So this is not different from what we considered above.

Most of us wouldn’t mind if our income increased. The problem is, that it is easier said than done.

Some of us can switch to higher-paying jobs with experience and some of us cannot.  So suggesting that we try to increase income does not help much.

If you cannot invest as much as you should

  1. It is not the end of the world. Do not lose hope. Invest what you can now. Try to increase investments each year, as much as possible.
  2. Retirement is a unique financial goal. You do not need the entire corpus when you retire.
  3. All you need is
    •  One big chunk, large enough for you to provide inflation-proof income for the first decade in retirement.
    • Another big chunk which can be invested for a decade and will provide you income in the second decade of retirement.
    • This is still a large sum of money but not as large as standard calculators project. So you might be able to pull it off with a MARGINALLY lower investment(!).
    • What is offered in this post is not a solution but a small glimmer of hope for those who cannot invest enough.
  4. The sooner you start investing for retirement, the higher can be your equity exposure, pre- and post-retirement. If you start early, you can continue to hold about 30-40% of equity investments even after retirement.
  5. Standard retirement calculators do not factor in a strategy where you hold your corpus in different buckets of varying risk-reward potential.  (see more about this here)
  6. Thankfully so. Otherwise, investors will tend to become overconfident and take retirement less seriously. More importantly one cannot factor in such a strategy decades away from retirement.
  7. If you are lucky to see a significant bull run for a few years, the monthly investment required might decrease.
  8. If you can invest as much as the calculator says you should, please ignore this post and invest away. With luck, you might be able to retire early.

New Delhi Investor Workshop

Register using the screen below or from the registration page

If you have friends or relatives in Delhi who you think could benefit from this workshop, please forward this link to them.

Do share this article with your friends using the buttons below.

🔥Enjoy massive discounts on our courses, robo-advisory tool and exclusive investor circle! 🔥& join our community of 5000+ users!
Use our Robo-advisory Tool for a start-to-finish financial plan! More than 1,000 investors and advisors use this!
New Tool! => Track your mutual funds and stock investments with this Google Sheet!
Follow Freefincal on Google News
Follow Freefincal on Google News
Subscribe to the freefincal Youtube Channel. Subscribe button courtesy: Vecteezy.
Subscribe to the freefincal Youtube Channel.
Follow freefincal on WhatsApp Channel
Follow freefincal on WhatsApp
Podcast: Let's Get RICH With PATTU! Every single Indian CAN grow their wealth! 
Listen to the Lets Get Rich with Pattu Podcast
Listen to the Let's Get Rich with Pattu Podcast
You can watch podcast episodes on the OfSpin Media Friends YouTube Channel.
Lets Get RICH With PATTU podcast on YouTube
Let's Get RICH With PATTU podcast on YouTube.

  • Do you have a comment about the above article? Reach out to us on Twitter: @freefincal or @pattufreefincal
  • Have a question? Subscribe to our newsletter with the form below.
  • Hit 'reply' to any email from us! We do not offer personalized investment advice. We can write a detailed article without mentioning your name if you have a generic question.

Join over 32,000 readers and get free money management solutions delivered to your inbox! Subscribe to get posts via email!

Explore the site! Search among our 2000+ articles for information and insight!

About The Author

Pattabiraman editor freefincalDr. M. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. He has over ten years of experience publishing news analysis, research and financial product development. Connect with him via Twitter, Linkedin, or YouTube. Pattabiraman has co-authored three print books: (1) You can be rich too with goal-based investing (CNBC TV18) for DIY investors. (2) Gamechanger for young earners. (3) Chinchu Gets a Superpower! for kids. He has also written seven other free e-books on various money management topics. He is a patron and co-founder of “Fee-only India,” an organisation promoting unbiased, commission-free investment advice.
Our flagship course! Learn to manage your portfolio like a pro to achieve your goals regardless of market conditions! More than 3,000 investors and advisors are part of our exclusive community! Get clarity on how to plan for your goals and achieve the necessary corpus no matter what the market condition is!! Watch the first lecture for free!  One-time payment! No recurring fees! Life-long access to videos! Reduce fear, uncertainty and doubt while investing! Learn how to plan for your goals before and after retirement with confidence.
Our new course!  Increase your income by getting people to pay for your skills! More than 700 salaried employees, entrepreneurs and financial advisors are part of our exclusive community! Learn how to get people to pay for your skills! Whether you are a professional or small business owner who wants more clients via online visibility or a salaried person wanting a side income or passive income, we will show you how to achieve this by showcasing your skills and building a community that trusts you and pays you! (watch 1st lecture for free). One-time payment! No recurring fees! Life-long access to videos!   
Our new book for kids: “Chinchu gets a superpower!” is now available!
Both boy and girl version covers of Chinchu gets a superpower
Both the boy and girl version covers of Chinchu gets a superpower.
Most investor problems can be traced to a lack of informed decision-making. We have all made bad decisions and money mistakes when we started earning and spent years undoing these mistakes. Why should our children go through the same pain? What is this book about? As parents, what would it be if we had to groom one ability in our children that is key not only to money management and investing but to any aspect of life? My answer: Sound Decision Making. So in this book, we meet Chinchu, who is about to turn 10. What he wants for his birthday and how his parents plan for it and teach him several key ideas of decision-making and money management is the narrative. What readers say!
Feedback from a young reader after reading Chinchu gets a Superpower (small version)
Feedback from a young reader after reading Chinchu gets a Superpower!
Must-read book even for adults! This is something that every parent should teach their kids right from their young age. The importance of money management and decision making based on their wants and needs. Very nicely written in simple terms. - Arun.
Buy the book: Chinchu gets a superpower for your child!
How to profit from content writing: Our new ebook is for those interested in getting side income via content writing. It is available at a 50% discount for Rs. 500 only!
Want to check if the market is overvalued or undervalued? Use our market valuation tool (it will work with any index!), or get the Tactical Buy/Sell timing tool!
We publish monthly mutual fund screeners and momentum, low-volatility stock screeners.
About freefincal & it's content policy. Freefincal is a News Media Organization dedicated to providing original analysis, reports, reviews and insights on mutual funds, stocks, investing, retirement and personal finance developments. We do so without conflict of interest and bias. Follow us on Google News. Freefincal serves more than three million readers a year (5 million page views) with articles based only on factual information and detailed analysis by its authors. All statements made will be verified with credible and knowledgeable sources before publication. Freefincal does not publish paid articles, promotions, PR, satire or opinions without data. All opinions will be inferences backed by verifiable, reproducible evidence/data. Contact information: letters {at} freefincal {dot} com (sponsored posts or paid collaborations will not be entertained)
Connect with us on social media
Our publications

You Can Be Rich Too with Goal-Based Investing

You can be rich too with goal based investingPublished by CNBC TV18, this book is meant to help you ask the right questions and seek the correct answers, and since it comes with nine online calculators, you can also create custom solutions for your lifestyle! Get it now.
Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You Want Gamechanger: Forget Start-ups, Join Corporate and Still Live the Rich Life you wantThis book is meant for young earners to get their basics right from day one! It will also help you travel to exotic places at a low cost! Get it or gift it to a young earner.

Your Ultimate Guide to Travel

Travel-Training-Kit-Cover-new This is an in-depth dive analysis into vacation planning, finding cheap flights, budget accommodation, what to do when travelling, and how travelling slowly is better financially and psychologically, with links to the web pages and hand-holding at every step. Get the pdf for Rs 300 (instant download)