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This post is a sequel to the **low-stress retirement calculator **published a few months ago. With this calculator, you can reduce the total retirement corpus required by about 10%-12% for normal retirement (age 60) and the monthly investment required by 20-30%. The reduction could be even more significant in the case of early retirement.

**How is this possible?**

Most retirement calculators (including all of mine published thus far) use a single rate of return post-retirement. Instead of this, why not use a bucket strategy?

Instead of this, why not use a** bucket strategy**?

Here, the retirement corpus is invested in different buckets of varying volatility. Expenses for the first (say) 5 years are met with by creating an income ladder (typically with fixed deposits on paper. Short-term debt funds will make this easier).

Meanwhile, the rest of the corpus grows at different rate of returns. The amount necessary to create income ladders between years 6-15 grow in low-risk instruments, while the rest if the amount grows in more volatile instruments.

This method has been explained in detail in the following posts:

**Illustration: Passive Income Generation****how to generate inflation-protected income from a lump sum****Income ladder calculator**- Also see
**Early retirement resources at freefincal**

In the present calculator, I have married the **low-stress retirement calculator **with **Inflation-protected Income Simulator**

I have resisted the temptation to do this several times earlier. However, I find that many young earners are put off with retirement planning when they see the corpus required and the monthly investment necessary.

Therefore to alleviate their stress, such a union of accumulation (pre-retirement) and distribution (post-retirement) strategies seemed necessary.

I hope this tool is able to help to achieve that.

**A word of caution. ** The calculator has two sheets. One is the input sheet and another for the income ladder calculation. I suggest that young earners far from retirement do not change the conservative inputs in the income ladder sheet.

Here is a screenshot (click on it to study the inputs and the 39% reduction in stress!)

## Download the even lower stress retirement calculator!

**About the Author**M. Pattabiraman(PhD) is the author and owner of freefincal.com. He is an associate professor at the Indian Institute of Technology, Madras since Aug 2006. Follow @freefincal “

**Pattu**” as he is popularly known, 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. Pattu publishes unbiased, promotion-free research, analysis and holistic money management advice. Freefincal serves more than one million readers a year (2.5 million page views) with numbers based analysis on topical issues and has more than a 100 free calculators on different aspects of insurance and investment analysis. He conducts free money management sessions for corporates and associations(see details below). Previous engagements include

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Dear pattu sir,

I have to invest Rs 300000 in my grand daughters name. She is now one yr. The amount should be help full for education and marriage also.this will be goal based investment for twenty years. Kindly guide me where to invest.

Anil padaki

You can used an equity-oriented balanced fund for this like HDFC balanced. ICICI balanced etc.

Dear pattu sir,

I have to invest Rs 300000 in my grand daughters name. She is now one yr. The amount should be help full for education and marriage also.this will be goal based investment for twenty years. Kindly guide me where to invest.

Anil padaki

You can used an equity-oriented balanced fund for this like HDFC balanced. ICICI balanced etc.

thanks for the nice post

Thank you.

thanks for the nice post

Thank you.

Dear Mr. Pattu : I have one doubt. For an investment of say18 Lakhs for Bucket 5 ( required after 20 years later) if you are investing in equity based MF, how to invest – as lumpsum at the start of ur retirement or some kind of stp. Provide your viewpoint please.

Dear Mr. Pattu : I have one doubt. For an investment of say18 Lakhs for Bucket 5 ( required after 20 years later) if you are investing in equity based MF, how to invest – as lumpsum at the start of ur retirement or some kind of stp. Provide your viewpoint please.

Dear Mr. Pattu : I have one doubt. For an investment of say18 Lakhs for Bucket 5 ( required after 20 years later) if you are investing in equity based MF, how to invest – as lumpsum at the start of ur retirement or some kind of stp. Provide your viewpoint please.

A small suggestion to factor in other income sources

Thanks a lot for the hard work done in creating the template for the bucket strategy. There seems to be no formulaic way to do this. I have an early retirement goal and used to discount the typical retirement corpus calculation by 20%. The excel gives a far more precise amount, and also lays out the investment plan. A suggestion: The inputs sheet can be modified to include calculations for ‘other income’ during retirement – say rent, defined pension, etc.

A small suggestion to factor in other income sources

Thanks a lot for the hard work done in creating the template for the bucket strategy. There seems to be no formulaic way to do this. I have an early retirement goal and used to discount the typical retirement corpus calculation by 20%. The excel gives a far more precise amount, and also lays out the investment plan. A suggestion: The inputs sheet can be modified to include calculations for ‘other income’ during retirement – say rent, defined pension, etc.

Thanks for the calculator. I compared this with bucket strategy simulator. I assume to follow bucket strategy simulator / calculator for the buckets 3 to 7 for this one. ie for each bucket from 3 on wards, one should invest in different mf categories. Also, one should follow the same guidelines to move around the bucket when one is close to that bucket age or ROI reaches or well beyond for that bucket. Correct me if I am not right.

Even though this calculator is very good to plan by 5 years period with several buckets, I think bucket strategy simulator gives rough estimate of how long that money lasts based on returns from mf.

For example, I ran both calculators for Rs 70k per month for 40 years, both gave the same amount as corpus required. But for the same returns, this told that money will last for all the 40 years, but bucket strategy simulator gave only upto 37 years. Yes, bucket strategy simulator. gives different amount each time, but one should consider the lowest so that plan ahead.

Once again, it took a while to play around both, can’t imagine how much time and effort that you put to create these. Thank you for your efforts.

Thanks for the calculator. I compared this with bucket strategy simulator. I assume to follow bucket strategy simulator / calculator for the buckets 3 to 7 for this one. ie for each bucket from 3 on wards, one should invest in different mf categories. Also, one should follow the same guidelines to move around the bucket when one is close to that bucket age or ROI reaches or well beyond for that bucket. Correct me if I am not right.

Even though this calculator is very good to plan by 5 years period with several buckets, I think bucket strategy simulator gives rough estimate of how long that money lasts based on returns from mf.

For example, I ran both calculators for Rs 70k per month for 40 years, both gave the same amount as corpus required. But for the same returns, this told that money will last for all the 40 years, but bucket strategy simulator gave only upto 37 years. Yes, bucket strategy simulator. gives different amount each time, but one should consider the lowest so that plan ahead.

Once again, it took a while to play around both, can’t imagine how much time and effort that you put to create these. Thank you for your efforts.

The best way to do it is, if you already have equity mfs, leave 8L there after retirement.

The best way to do it is, if you already have equity mfs, leave 8L there after retirement.

Hi,

I used your calculator with the provided data. I change a little. I found majorly 9-12 thousand per month needs to be invested in Equity Market.

I have 3 years exp with UTI opp. fund (G) for 1000/~ SIP and get good results after 3 years.

36000 -> 56000 return

My home loan EMI will be completed with in 4 months. Hence I can invest 9-12 thousand to reach the goal as per your calculator for 15-20 yrs.

now how can i invest this 12000 thousand per month ?

In a single long trem Equity oriented MF ?

Or

6000 + 6000 to 2 different fund

Or 4000 + 5000+ 3000 to 3 MFs

what will be suggested ?

Thank you

shankha

You need a diversified equity folio of about 50-60% large caps and rest in mid and small caps. So adjust accordingly.

Hi,

I used your calculator with the provided data. I change a little. I found majorly 9-12 thousand per month needs to be invested in Equity Market.

I have 3 years exp with UTI opp. fund (G) for 1000/~ SIP and get good results after 3 years.

36000 -> 56000 return

My home loan EMI will be completed with in 4 months. Hence I can invest 9-12 thousand to reach the goal as per your calculator for 15-20 yrs.

now how can i invest this 12000 thousand per month ?

In a single long trem Equity oriented MF ?

Or

6000 + 6000 to 2 different fund

Or 4000 + 5000+ 3000 to 3 MFs

what will be suggested ?

Thank you

shankha

You need a diversified equity folio of about 50-60% large caps and rest in mid and small caps. So adjust accordingly.

Pattuji, this calculator assumes that the expenses after retirement shall be same as they are currently(with inflation). Does that seem logical for most of the people?

A retirement calculator is meant to used at once a year with updated inputs all the way to retirement.