Last Updated on

Last week I wrote about an inflation protected income can be generated by dividing a corpus into 4/5 portions and investing each into financial instruments of varying risk and tenure, while setting up an **income ladder** for the first few years. As the investment in each bucket matures a new income ladder will be set up with it.

If you have not read that post, I strongly suggest you read it first and then get back to this one: **Generating an inflation-protected income with a lump sum**

I was surprised by the popularity of that post and received many requests to post a calculator with which different possibilities based on this strategy can be simulated. This post describes such an inflation-protected income simulator.

The calculator has two sheets:

**Single Bucket Income Ladder**This helps to understand what an income ladder is.

The idea is to invest in fixed-income instruments of varying maturity. The maturity value of each investment corresponds to the income needed that year taking an assuming rate of inflation into account. For more details see **here **

This is an offshoot of my popular **income ladder calculator ** This describes two ways of creating the ladder: cumulatively or with payouts.

Last weeks post and the present calculator assumes investments are cumulative.

**0+6 Buckets income ladder**

This sheet allows you to *determine the total corpus required to generate an inflation-protected income for desired period ( a maximum of 210 years!!).*

This period can divided into a maximum of 7 buckets of varying risk (as determined by the return).

When the buckets mature, an income ladder of some assumed return is set up to generate income.

The calculator is flexible, and the buckets can be constructed with different tenures and different returns.

**Note: **Please use appropriate post-tax returns everywhere.

This is a deterministic simulator. That is the returns are assumed to be fixed. If you use higher returns, they are likely to be associated with a **non-zero standard deviation** and therefore, volatility. This will have a huge impact on the final results.

If you are interested in trying out buckets with volatility, try out this popular and addictive: **Retirement ‘Bucket Strategy’ Simulator**

**Create a "from start to finish" financial plan with this unique open-source robo advisory software template**

**Don't like ads but want to support the site? Subscribe to the ad-free newsletter!****Follow this link to read the terms and sign up!**

## ❖

**About the Author**M. Pattabiraman is the co-author of two books:

**You can be rich too with goal based investing**and

**Gamechanger**. “

**Pattu**” as he is popularly known, publishes unbiased, promotion-free research, analysis and holistic money management advice. Freefincal serves more than one million readers a year with numbers based analysis on topical issues and has more than a 100 free calculators on different aspects of insurance and investment analysis, including a robo advisory template for use by beginners.

**Contact information:**freefincal {at} Gmail {dot} com He conducts free money management sessions for corporates (see details below). Previous engagements include

*World Bank*, RBI,

*BHEL*, Asian Paints.

**Content Policy**

Freefincal has original unbiased, conflict-of-interest-free, topical reports, reviews, commentary and analysis on all aspects of personal finance like mutual funds, stocks, insurance etc. All guest authors and contributors to the site also do not have any conflict of interest. If you find the content useful, please consider supporting us by (1) sharing our articles and (2) disabling ad-blockers for our site if you are using one. **No promotional content**.

**We do not accept sponsored posts and link exchange requests from content writers and agencies**. This is our privacy policy

**Our website is non-profit in nature**. The revenue from the advertisement will only be used for hosting charges, domain registration charges, specific plugins necessary for traffic growth and analytics services for search engine optimisation.

**Want to conduct a sales-free "basics of money management" session in your office?**

**Connect with us on social media**

**Twitter @freefincal****Facebook**- Subscribe to our
**Youtube Videos** - Posts feed via:
**Feedburner** **Pinterest**

**Do check out my books**

**You Can Be Rich Too with Goal-Based Investing**

**My first book is meant to help you ask the right questions, seek the right answers and since it comes with nine online calculators, you can also create custom solutions for your lifestyle!**

**Get it now**. It is also available in Kindle format.

**Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You Want**

**My second book is meant for young earners to get their basics right from day one! It will also help you travel to exotic places at low cost!**

**Get it or gift it to a young**

**earner**

**The ultimate guide to travel by Pranav Surya**

This is a deep dive analysis into vacation planning, finding cheap flights, budget accommodation, what to do when travelling, how travelling slowly is better financially and psychologically with links to the web pages and hand-holding at every step. **Get the pdf for ₹199 (instant download)**

**Free Apps for your Android Phone**

All calculators from our book, “You can be Rich Too” are now available on Google Play!Install Financial Freedom App! (Google Play Store)

Install Freefincal Retirement Planner App! (Google Play Store)

Find out if you have enough to say "FU" to your employer (Google Play Store)

What really caught my eyes , apart from your excellent blog was Stephan.R.Covey’s comment. Thanks for sharing it.

Thanks Rajiv. I found the photo in Flickr.

What really caught my eyes , apart from your excellent blog was Stephan.R.Covey’s comment. Thanks for sharing it.

Thanks Rajiv. I found the photo in Flickr.

Thanks Pattu, for the calculator.

You are welcome. Thanks for trying it out.

Thanks Pattu, for the calculator.

You are welcome. Thanks for trying it out.

i view the strategy of bucketing as a way to utilize the retirement corpus wisely than simple advice of investing it only in traditional debt instruments. thank you for the strategy and related calculators.

Yes I agree. Thank you.

i view the strategy of bucketing as a way to utilize the retirement corpus wisely than simple advice of investing it only in traditional debt instruments. thank you for the strategy and related calculators.

Yes I agree. Thank you.

Hi Pattu, thanks for en-lighting me through your website, This is a great source for investment ideas for someone like me who is contemplating retiring early. The bucket calculator is a great tool to understand the strategy. What is your thought on dividing the corpus half, and creating a single bucket ladder and investing the other half in debt or balanced fund for 10 years. If this fund returns 9% annually, the investment will double by compounding. With this one could create another single bucket ladder for the remaining years.

Thank you. Although the remaining corpus will double by compounding, you will be to be wary of inflation (8-10%). For a 10 Y duration the volatility has to be low. So be careful with balanced funds with high equity content. please keep in mind these are deterministic calculations. You will need to make a call as things progress. Always remember to keep volatility (risk) zero in main income bucket, minimum in second bucket. If you want returns then you will need to give it time at least 15 years.

Thanks Pattu, Just downloaded your bucket simulator tool. Can’t thank u enough, appreciate your hard work. Will play with this tool extensively before throwing in my paper. Finally I have a genuine source of information without any conflict of interest.

Thank you very much. Look forward to your feedback.

Hi Pattu, thanks for en-lighting me through your website, This is a great source for investment ideas for someone like me who is contemplating retiring early. The bucket calculator is a great tool to understand the strategy. What is your thought on dividing the corpus half, and creating a single bucket ladder and investing the other half in debt or balanced fund for 10 years. If this fund returns 9% annually, the investment will double by compounding. With this one could create another single bucket ladder for the remaining years.

Thank you. Although the remaining corpus will double by compounding, you will be to be wary of inflation (8-10%). For a 10 Y duration the volatility has to be low. So be careful with balanced funds with high equity content. please keep in mind these are deterministic calculations. You will need to make a call as things progress. Always remember to keep volatility (risk) zero in main income bucket, minimum in second bucket. If you want returns then you will need to give it time at least 15 years.

Thanks Pattu, Just downloaded your bucket simulator tool. Can’t thank u enough, appreciate your hard work. Will play with this tool extensively before throwing in my paper. Finally I have a genuine source of information without any conflict of interest.

Thank you very much. Look forward to your feedback.

Do you think its a good idea to start working on the bucket strategy as soon as you reach 60 & retired OR when one actually retires from active work life (with a shade more corpus at say 63-64) ?

Do you think its a good idea to start working on the bucket strategy as soon as you reach 60 & retired OR when one actually retires from active work life (with a shade more corpus at say 63-64) ?

Pattabiraman Murari ji, Thanks for the clarification. Will take notes and convert this into an action plan.

Pattabiraman Murari ji, Thanks for the clarification. Will take notes and convert this into an action plan.

Pattabiraman Murari ji, Thanks for the clarification. Will take notes and convert this into an action plan.

Hi Vinay,Either way is fine. Bucketing can be started at 60 itself while you continue to work for a few more years. This would allow more time for the buckets to grow.

Hi Vinay,Either way is fine. Bucketing can be started at 60 itself while you continue to work for a few more years. This would allow more time for the buckets to grow.

Hi Vinay,Either way is fine. Bucketing can be started at 60 itself while you continue to work for a few more years. This would allow more time for the buckets to grow.

Thank you very much Pattu I really appreciate your advice and help on this. I'm 57 this year and want to retire at 60.. so I'll have a play around with this and read all the data on the web pages. Looks wonderful.. thank very much again..

Thank you very much Pattu I really appreciate your advice and help on this. I'm 57 this year and want to retire at 60.. so I'll have a play around with this and read all the data on the web pages. Looks wonderful.. thank very much again..

Okay sure. Thank you.

Okay sure. Thank you.

Thanks for this calculator. I have couple of requests, is it possible to increase the maximum years from 30 to 40/45? Also in the 2nd sheet, it is restricted only upto 25, again is it possible to increase to 40/45 yeras? Thanks

See

http://freefincal.com/the-even-lower-stress-retirement-calculator/

Thanks for this calculator. I have couple of requests, is it possible to increase the maximum years from 30 to 40/45? Also in the 2nd sheet, it is restricted only upto 25, again is it possible to increase to 40/45 yeras? Thanks

See

http://freefincal.com/the-even-lower-stress-retirement-calculator/

Hi Pattu sir,

Does it work expenses like child marriage ,education and medical expenses? or those things needs to be consider seperately ?Please confirm

No, those are separate.