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**

**Download the Inflation-protected Income Simulator**

**Free Apps for your Android Phone**

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

pattuPost authorThanks Rajiv. I found the photo in Flickr.

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

pattuPost authorThanks Rajiv. I found the photo in Flickr.

PlanRupeeThanks Pattu, for the calculator.

pattuPost authorYou are welcome. Thanks for trying it out.

PlanRupeeThanks Pattu, for the calculator.

pattuPost authorYou are welcome. Thanks for trying it out.

bharat shahi 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.

pattuPost authorYes I agree. Thank you.

bharat shahi 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.

pattuPost authorYes I agree. Thank you.

pradeep nairHi 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.

pattuPost authorThank 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.

Pradeep NairThanks 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.

pattuPost authorThank you very much. Look forward to your feedback.

pradeep nairHi 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.

pattuPost authorThank 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.

Pradeep NairThanks 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.

pattuPost authorThank you very much. Look forward to your feedback.

Vinay Maithani CmrpDo 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) ?

Vinay Maithani CmrpDo 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) ?

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

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

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

Pattabiraman MurariHi 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.

Pattabiraman MurariHi 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.

Pattabiraman MurariHi 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.

John DohertyThank 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..

John DohertyThank 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..

Pattabiraman MurariOkay sure. Thank you.

Pattabiraman MurariOkay sure. Thank you.

sundararajanThanks 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

freefincalPost authorSee

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

sundararajanThanks 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

freefincalPost authorSee

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

yogeshHi Pattu sir,

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

freefincalPost authorNo, those are separate.