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.
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.
Here are four calculators that will help you answer:
- What is the corpus required, for an assumed annual payout(annuity/pension), inflation, rate of return and duration?
- What will be the annual payout, for a given corpus, assumed inflation, rate of return and duration?
- How long will a corpus last, for a given corpus, assumed annual payout, inflation and rate of return?
- 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)
- 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.
Get GameChanger (my second book) + Pranav's Travel Training Kit GameChanger (hardcopy is now available for ₹279 (249 +30 for shipping) and the Travel Training Kit is available for immediate download for ₹150.
Get free, yet comprehensive calculators, tools and analysis delivered to your mailbox! Subscribe to get posts via email
Buy our New Book!You Can Be Rich With Goal-based Investing A book by P V Subramanyam (subramoney.com) & M Pattabiraman. Read more about the book and pre-order now!