The even lower stress retirement calculator!

Published: March 5, 2015 at 7:50 am

Last Updated on

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:

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!)low-stress-retirement-calculator

 

Download the even lower stress retirement calculator!

Excel 2007 version (.xlsx)

Excel 2002 version (.xls)

Do share if you found this useful
Share your thoughts on this topic at the  Reddit freefincal_user_forum

Reach your financial goals like a pro! Join our 1600+ Facebook Group on Portfolio Management! You can now reduce fear, doubt and uncertainty while investing for your financial goals! Sign up for our lectures on goal-based portfolio management and join our exclusive Facebook Community. The 1st lecture is free!
Want to check if the market is overvalued or undervalued? Use our market valuation tool (will work with any index!) or you buy the new Tactical Buy/Sell timing tool!
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. For speaking engagements write to pattu [at] freefincal [dot] com
About freefincal & its content policy Freefincal is a News Media Organization dedicated to providing original analysis, reports, reviews and insights on developments in mutual funds, stocks, investing, retirement and personal finance. We do so without conflict of interest and bias. Follow us on Google News Freefincal serves more than one million readers a year (2.5 million page views) with articles based only on factual information and detailed analysis by its authors. All statements made will be verified from credible and knowledgeable sources before publication. Freefincal does not publish any kind of paid articles, promotions or PR, satire or opinions without data. All opinions presented will only be inferences backed by verifiable, reproducible evidence/data. Contact information: letters {at} freefincal {dot} com (sponsored posts or paid collaborations will not be entertained)
Connect with us on social media
Our publications

You Can Be Rich Too with Goal-Based Investing

You can be rich too with goal based investingPublished by CNBC TV18, this 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 Gamechanger: Forget Start-ups, Join Corporate and Still Live the Rich Life you wantThis 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

Your Ultimate Guide to Travel

Travel-Training-Kit-Cover-new 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 Rs 199 (instant download)
Free android apps