“FU Money” represents the amount required for a person to stop being employed. She is then free to follow her passion and wait for it to generate an income without having to worry about expenses for at least a few years. Or the corpus could be large enough to generate an inflation-protected income for the rest of her life.
For those who may not know, FU is way of, er .. saying “goodbye” to your employer. U the FU stands for You and the F stands for one of the most popular expletives 🙂
Of course, every retirement calculator is an FU Money calculator. They tell you the corpus required. I have extended this a bit to offer two outputs:
1: If you were to retire today, how long will your current holdings last?
For example, if your current age is 40 and the answer to this question is:
10 years –> You can consider quit being employed and start a new venture on your own. You can wait for it gain traction in a few years without stress.
30 years —> Then the corpus could last you for next 25-30 years. You are almost financially free. If you hang in there for just a little while, this number could become a lot more robust.
2: If you were to retire as intended (normal retirement, say age 60), and made no further investments towards retirement, how long the money will last after (normal) retirement.
Suppose your age is 40, normal retirement is 60 and the answer to this question is:
10 years –> You will be financially independent in retirement for only 60+10 = 70 years. Not good enough. You need to continue investing for retirement.
25 years –> Then you will be financial independent for 60+ 25 ~ up to age 85. Pretty good. This means that if your current holding (fixed income, equity) grow as expected, it will produce a coprus that is good enough until age 85.
You can,
either continue investing for retirement with an aim to retire earlier or
lower the investment amount* or
even take a chance and stop investing for retirement*
* excercise caution please.
I hope that gives you a picture of what the FU Money Calculator does.
Here is a screentshot:
The last two outputs are the ones discussed above.
An android app based on this is in the works. Will publish that later.
Weblink to FU Money Calculator
Download the FU Money Calculator (excel sheet)
As always, I am open to feedback. Let me know how this can be modified. If you are using my mutual fund goal tracker, you will realise that these calculations are already there 🙂 They are also part of the Monthly Financial Tracker.
You Can Be Rich Too
My new book with PV Subramanyam, published by CNBC TV 18
The book comes with 9 online calculator modules to create your own financial plan.
It also has detailed selection guides for equity and debt mutual funds.
Amazon (₹ 375)
Kindle (₹ 244.30)
Infibeam ₹ 280 with Coupon BS10
Googe Play Books App Store (₹ 244.30)
Read a Sample Chapter and Buy Now!
What Readers Say
- Simple and powerful This book empowers the reader with the concepts in easy to understand & simple form. Those who have been reading blogs of both authors would know that they are not only good with finance domain but also have a knack of simplifying the methods of investing for their readers. This book by them is a gem of financial knowledge for people who are starting to invest or want to get better at it. The presentation and the thought process with calculators is extremely powerful.The book should be read & calculators used simultaneously to understand the concepts well. The calculators when used with real inputs will show you where you are & where you need to reach for each of your goals. Don’t ignore these numbers.Learnings from Chapters 7 to 11 will help you avoid going off path & saving your money from financially hazardous products. With discipline & right approach suggested here you wouldn’t need a financial advisor to build wealth.
- This is perfect book on personal finance. Very nicely explained about taxation about debt mutual fund. Topics like early investing and asset allocation are very well explained. – Mahesh Deshmukh
- Highly Recommended For anyone who wishes to take control of his/her finance this book is a must read. Very simply put, even an amateur in finance will be able to understand and implement. The author genuinely attempts to inculcate the habit of investing among the people who have the ability to invest but refrain from doing it, either due to lack of time , interest or understanding!. The message from the book is ” Investment done without setting a goal/ objective is like leaving for a trip without knowing the destination, not everytime the end result will be promising. Hence, it’s important to invest in a planned & disciplined manner.” A read is highly recommended ????
- A must book for everyone who wants to take control of personal finance. Nice explanation of how a debt mutual fund works. Bonds trading and indexation benefits in high inflation years were something new I learnt. After reading this book you will be able to easily choose any funds, because you will know what that fund does or how that fund works
Read all reviews here: Amazon Reviews
Thanks pattu for another awesome calculator..This one was at the right time for me..On the web calculator, “Annual increase in monthly investment” is fixed at 10% which I think must be editable as it is in spreadsheet..Can you pls check
Thank you. Conversion issue. I will check and get back in a bit.
Puttu Sir, Not sure if I have overseen – else please add
1) Income that I can generate till my retirement age , example salary
2) Fixed income that I am getting ( with inflation growth ) , example rent.
You can use Retirement Calculator -Comprehensive Version
Yes, I have passive income streams from rentals, dividends and other Investments which greatly help in increasing number of years of financial independence.
The rental income will grow at at least 5%. The others not so much (have taken growth for these as 0%).
You can use Retirement Calculator -Comprehensive Version
Hi Pattu Sir, if I change the Inflation Number from 8% to 7%, the value in the last row (if you were to retire as intended, you will be financially independent upto age ___) is throwing an error. Can you please check the same?
I am not able to reproduce that error. Seem okay to me.
It would be great if you could integrate these outputs in the “Even Lower Stress Retirement Calculator”
Just one more formula to add. you can DIY from this sheet.
Very useful article. One addition can be made in your every calculator regarding receipt of pension. If some one is receiving pension than all retirement and goal planner calulators are of not much use for them.
” If some one is receiving pension than all retirement and goal planner calulators are of not much use for them.” NOT true at all. Check Retirement Calculator for the Middle-aged Employee
I cannot add pension details to every calculator!
If I change the value in ‘Curent annual expenses that will persist when you retire’ from 400000 to 2000000 then the value of ‘If you were to retire today the current corpus will last until age’ does not change much .Values recorded below . How would that be correct.
Result with 400000
Year of Birth 1984
Year of normal retirement 2033
Life expectancy 80
Inflation (throughout lifetime!) 8%
Curent annual expenses that will persist when you retire 400000
Post-tax rate of return (conservative) expected AFTER retirement 9%
Value of retirement corpus from fixed income sources 500,000
Average fixed income rate of return expected 8%
When you retire the fixed income corpus will aproximately grow to 1,468,597
Value of equity (stocks+ mfs) corpus 600,000
Average equity rate of return expected 12%
When your retire the current mf corpus will grow to 2,932,267
Years to normal retirement 14
Years in normal retirement 33
Annual expenses when you retire (retirement income in 1st year of retirement) 1,266,195
Corpus required 36,194,436
If you were to retire today the current corpus will last until age 35.8
If you were to retire as intended in 2033 you will be financially independent up to age 50.5
Result with 2000000
Year of Birth 1984
Year of normal retirement 2033
Life expectancy 80
Inflation (throughout lifetime!) 8%
Curent annual expenses that will persist when you retire 2000000
Post-tax rate of return (conservative) expected AFTER retirement 9%
Value of retirement corpus from fixed income sources 500,000
Average fixed income rate of return expected 8%
When you retire the fixed income corpus will aproximately grow to 1,468,597
Value of equity (stocks+ mfs) corpus 600,000
Average equity rate of return expected 12%
When your retire the current mf corpus will grow to 2,932,267
Years to normal retirement 14
Years in normal retirement 33
Annual expenses when you retire (retirement income in 1st year of retirement) 6,330,975
Corpus required 180,972,178
If you were to retire today the current corpus will last until age 33.5
If you were to retire as intended in 2033 you will be financially independent up to age 47.7