# Excel inflation-indexed annuity calculators to plan your retirement

Retirement planning is the single most important financial goal common to every individual.  It is the only financial goal in which a corpus would get spent over the course of decades!

Retirement planning is simply non-negotiable.  The cost of postponing systematic retirement planning is more dangerous than inflation.

Regular readers would be aware of that a wide range of retirement calculators is available at freefincal for efficient planning.

Anyone, from the absolute beginner, to someone planning early retirement, to someone nearing retirement, can use these tools to evaluate their options.

There are also two unique tools for someone close to retirement (early/normal: to plan their post-retirement investment options

When I was trying to put together an article on ‘how to generate an inflation-protected income stream with a lump sum’, I realised the need to answer the following question:

Given a lump sum, what is the rate of return required to generate an income that increases in step with an assumed inflation rate for the reminder of our lifetime?

Since none of the existing calculators explicitly answer this question, I decided to make one.

1. What is the corpus required, for an assumed annual payout(annuity/pension), inflation, rate of return and duration?
2. What will be the annual payout, for a given corpus, assumed inflation, rate of return and duration?
3. How long will a corpus last, for a given corpus, assumed annual payout, inflation and rate of return?
4. What is the rate of return required to ensure a given corpus lasts a specific duration for an assumed inflation and rate of return? (new addition)
5. I have also included the retirement planner for beginners so that the file can be used all – those, far from retirement, close to retirement and in retirement!

Note: These are called annuity calculators. Well, at least the math is referred to as annuity calculations.

Strictly speaking an annuity represents an annual/quarterly/monthly payout made by an insurer after taking a lump sum from a retiree. In India, annuities are not linked to inflation. LIC offers an annuity that increases 3% each year.

If a retiree has a large corpus, buying an annuity is the very last thing a retiree should do!

Annuities are strictly for those  who cannot afford to allocate a part of their nest egg for investment and must use the entire sum to generate income from the first year of retirement. Sadly such income will be constant and will lose value with time.

So although I call them as annuity calculators, it is important to remember that calculations are made for inflation-indexed income.

Download the inflation-indexed annuity calculators (Apr 2014). Revised after incorporating Mr. Masilamani’s suggestion

Download the inflation-indexed annuity calculators (Jan 2014)

Want to conduct a sales-free "basics of money management" session in your office?
I conduct free seminars to employees or societies. Only the very basics and getting-started steps are discussed (no scary math):For example: How to define financial goals, how to save tax with a clear goal in mind; How to use a credit card for maximum benefit; When to buy a house; How to start investing; how to invest for and after retirement etc. depending on the audience. If you are interested, you can contact me: freefincal [at] Gmail [dot] com. You need to only cover my travel fare for the session.

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