Four Simple Retirement Planning Tools

Whether you are contemplating early retirement or are close to your natural retirement, here are four simple calculators than can answer four important questions:

  1. What is the corpus required for financial independence in retirement?
  2. How long will my retirement corpus last?
  3. How much can I withdraw from my corpus each year?
  4. 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:

Return(%) =ROUND(RATE(years,-payment2,corpus2,0,1)*(1+inflation2)+inflation2,2)

I have now incorporated this delightfully simple suggestion. A big thank you to Mr. Masilamani for educating me in this regard.

Download the Excel inflation-indexed annuity calculators

A standard retirement calculator is also included.

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4 thoughts on “Four Simple Retirement Planning Tools

  1. Indra

    Hi Pattu - Thanks for the great calculator. I have used the earlier version before so will give this a good spin. One thing that i noticed right off the bat is that there is no validation for negative entries in the input cells. If that is for simplicity thats alright - the utility of these calculators definitely don't get diminished by the lack of input validations. Thanks again. Will write back once I have used some more.

    Reply
    1. pattu

      Thank you. Yes I did not both to put in checks on negative values. Figured only people who understand the inputs will use this one!

      Reply
  2. Indra

    Hi Pattu - Thanks for the great calculator. I have used the earlier version before so will give this a good spin. One thing that i noticed right off the bat is that there is no validation for negative entries in the input cells. If that is for simplicity thats alright - the utility of these calculators definitely don't get diminished by the lack of input validations. Thanks again. Will write back once I have used some more.

    Reply
    1. pattu

      Thank you. Yes I did not both to put in checks on negative values. Figured only people who understand the inputs will use this one!

      Reply

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