[SlowDough]

Originally Posted by Axe77

3. Balance, whatever be that amount, whether it results in 50% or 75% or 90% of corpus (i.e. regardless of percentage) firmly remains entrenched in equity to serve as growth capital, which hopefully should double in these 5 - 7 years (an all equity portfolio even at a conservative 12% assumed CAGR should double every 6 years).

34 year old here who has been planning retirement since my 26 year old self started earning.

While the percentage formula is an oversimplification to make it easy for the leman to invest, it has one important lesson: If you lose money in the equity market, you need some runway to recover it.

Assume 3 types of portfolios: Dough portfolio (helps you sleep and enjoy life), Cockroach portfolio (outlasts generations worth of black swan events), Growth portfolio (grows your capital).

With the point 3 above, following questions are what I'd ask myself:
1. If you have achieved your X target, why do you need to take more risk? I always balance the risk with my needs.
2. What happens in a black swan event that risks both your debt investments (in a massive expense) and equity investments (in a market crash)? You'll be left with lower capital to both live as well as to invest.

I'd firmly stick to an equity allocation that meets the needs of my portfolio growing upto my estimated corpus and then maintaining it sufficiently till my death.(With buffers included, of course.) In other words, Growth portfolio needs to transition into Dough portfolio, and thereafter into Cockroach portfolio.

I know of at least one person who erred on the side of investing more than he needed to, even though he is 60+ and had enough capital to retire, and thereafter, is unable to enjoy life as much as he had wanted.

[Eddy]

My friend and I compiled this sheet for retirement corpus planning. None of the calculators I saw online had options to:

- Consider lump-sum withdrawals at specific ages.
- Consider lump-sum income from property sale/bequeathment etc
- Impact of LTCG
- Different rate of inflation for expenses pre- and post-retirement

So we incorporated this into a simple sheet. Play around and see if you can spot some errors and improve it further.

[pratika]

Originally Posted by Axe77

Does this make sense as an approach or any fatal flaws here?

This is very similar to a bucket based approach that many financial advisors recommend.

The benefit of this approach is that you're insulated from market movements since you've enough fixed income for several years, while you still get compounding from equity investments. It doesn't change the X one needs to save up as retirement corpus.

I think that moving from equity -> debt to refill the debt bucket has to be done a bit early rather than waiting for it to run low. So one can start booking some profit from market and moving to debt bucket in the last 2-3 yrs assuming your debt bucket is 6 yrs.

I'm thinking of keeping aside a 10 yr debt bucket and refilling it after 6 yrs.

[jigar12975]

Nice Strategy. I think what you are doing is called a bucket strategy. You make three buckets of short, mid and long term and accordingly allocate funds similar to what you have suggested. Immediate needs - 0 to 3 years, medium term - 3 -7 years and then long term - 7+. Though I am not sure of allocation to gold for any withdrawals post retirement. As physical gold selling may not give the value desired and gold etf do not track the actual price in the local markets. They track global commodity exchange prices.

[Axe77]

Originally Posted by Eddy

My friend and I compiled this sheet for retirement corpus planning.
...
So we incorporated this into a simple sheet. Play around and see if you can spot some errors and improve it further.

Hi Eddy. Interesting sheet and thank you for sharing it here. I did play around with it a bit and will give my (noobie) inputs if / when I have the chance to understand it better. In particular, it was handy to see line items that account for aspects like milestone expenses etc as it helped me to account for kid's further education which are lumpsum sizeable withdrawals.

I had a two questions. I did not understand what you are trying to cover in these two entries - A14 and A15.

A14. Annual Expenses growth rate till retirement

Is A14 referring to inflation or inflation combined with lifestyle upgradation? My baseline assumption is that my expenses will be capped at current lifestyle (if anything I may moderate it but I don't want to feed moderation into xls assumptions) with the only increase to be on account of inflation. If that is the case, should I insert a % that I attribute only to inflation and nothing more? Or is inflation already factored elsewhere

A15. Annual Expenses/income growth rate after retirement

Again, is this alluding to inflation plus expenses. Also, what is the reference to income growth rate here. I want to assume no income from any sources other than what the corpus generates. What should I feed in here in that case.

Thank you.

[Eddy]

Originally Posted by Axe77

A14. Annual Expenses growth rate till retirement

Is A14 referring to inflation or inflation combined with lifestyle upgradation? My baseline assumption is that my expenses will be capped at current lifestyle (if anything I may moderate it but I don't want to feed moderation into xls assumptions) with the only increase to be on account of inflation. If that is the case, should I insert a % that I attribute only to inflation and nothing more? Or is inflation already factored elsewhere

A15. Annual Expenses/income growth rate after retirement

Again, is this alluding to inflation plus expenses. Also, what is the reference to income growth rate here. I want to assume no income from any sources other than what the corpus generates. What should I feed in here in that case.

Thank you.

Thanks Axe.

A14 - Lifestyle growth + Inflation. The former applies mostly to younger folks who have yet to hit their peak lifestyle expenses.

A15 - Pure Inflation. Feed only the inflation numbers here.

I will rework cell A15 and split it into two. One for inflation and for annual increase in the passive income mentioned in A13. (e.g. you have another house that you have rented out. The rent would increase x% per month)

[deepak_misra]

Originally Posted by Eddy

My friend and I compiled this sheet for retirement corpus planning. None of the calculators I saw online had options to:

- Consider lump-sum withdrawals at specific ages.
- Consider lump-sum income from property sale/bequeathment etc
- Impact of LTCG
- Different rate of inflation for expenses pre- and post-retirement

I really like the simplicity of this calculator. I will comment further after checking the details but right now it is wonderful.

Immediate ideas for improvements:
- Optics in terms of formatting, borders etc. This is not essential for functionality but gives a good feel.
- Addition of a graph showing overall corpus year to year and when it will turn zero
- Tracking yearly expense and seeing how it matches with assumptions.

Once again - great work