The low-stress retirement calculator (hopefully!)

Published: September 29, 2014 at 9:46 am

Last Updated on October 21, 2020

The first time someone uses a retirement calculator, they are in for a couple of rude shocks!

  • The corpus required for financial independence post-retirement, taking inflation into account typically would be a few crores (if not several!)
  • Therefore the monthly investment required is typically equal to monthly expenses or even more!

Becuase of this I get more bricks than bouquets for my retirement calculators 🙁

With an aim to lower user stress here is an alternative version which explicitly accounts for three types of current  and future investments:

  • equity investments
  • taxable debt investments (fds, debt funds, gold, etc.)
  • tax-free debt investment (PPF, EPF)

It also takes into account future EPF contributions.

The corpus necessary for financial independence is reduced by the expected future value of current investments and future EPF contributions. This (hopefully!) would look a lot less daunting.

The sheet then asks you the intended asset allocation for future investments an annual increase in monthly investment.

The monthly investment required in each asset class and the expected future value at the time of retirement are calculated.

freefincal-retirement-calculator

My aim is to make a visual retirement tracker (like the visual SIP tracker) with this sheet as the basis.

I have annotated the inputs following a suggestion by Raghavendra Paripati. This tool was made after discussions with Aparna. Check out her presentation: An Introduction To Personal Finance For Young Earners

This calculator is now part of the  freefincal robo advisory template

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About the Author Pattabiraman editor freefincalM. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. since Aug 2006. Connect with him via Twitter or Linkedin Pattabiraman has co-authored two print-books, You can be rich too with goal-based investing (CNBC TV18) and Gamechanger and seven other free e-books on various topics of money management. He is a patron and co-founder of “Fee-only India” an organisation to promote unbiased, commission-free investment advice. He conducts free money management sessions for corporates and associations on the basis of money management. Previous engagements include World Bank, RBI, BHEL, Asian Paints, Cognizant, Madras Atomic Power Station, Honeywell, Tamil Nadu Investors Association, IIST Alumni Association. For speaking engagements write to pattu [at] freefincal [dot] com
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