Whether you are contemplating early retirement or are close to your natural retirement, here are four simple calculators than can answer four important questions:
- What is the corpus required for financial independence in retirement?
- How long will my retirement corpus last?
- How much can I withdraw from my corpus each year?
- What is the rate of return required for financial independence?
This sheet is an update to the previously published Excel inflation-indexed annuity calculators
Question no. 4, the rate of return required for financial independence is probably the most important question for any retiree.
If this is too large,
- for someone heading towards natural retirement, this means that the corpus is too small for active management and an annuity may have to be purchased.
- for someone seeking financial independence and early retirement, this means a postponement in retirement
When I published the previous version, I was under the impression that the rate of return cannot be determined directly and had to be done using Excels Goal-Seek function. So I had put in a Macro to do this like I did in the step-by-step guide to goal-based investing
Mr. Raghupathy Masilamani, wrote in suggesting that instead of a macro a simple formula can be used to calculate the rate of return when inflation is involved:
I have now incorporated this delightfully simple suggestion. A big thank you to Mr. Masilamani for educating me in this regard.
A standard retirement calculator is also included.