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Detailed Income Ladder Calculator
Switch
to the Simple Version
Instructions
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Enter
your desired annual income amounts in the first row. You do not
need to enter amounts for all 15 years. For example if you want to
create a 10-year income ladder, enter your desired income amounts
for the
first 10 years.
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Enter
the annual yield rates available for each corresponding maturity in the
second row. For example if you will be funding your income ladder
with bank certificates of deposit (CDs), and your bank offers:
| 1.8%
annual percent yield (APY) on CDs held for one year |
| 2.5% annual percent yield
(APY) on CDs
held for two years, etc. |
Enter
the APY values in the second row. Enter a yield rate below each
non-zero income amount. In other words a 10-year income ladder
requires 9 yield rates. You can find current yield rates
at: Bankrate.com
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Finally choose whether you would
like to withdraw interest annually or let interest accrue to
maturity. You can try both options to determine which one results
in a lower total cost to fund the income ladder. Always click
one of the buttons to recalculate the income ladder after making changes
to either the income amounts or the yield rates. The calculator
assumes that the first year's income will be met with cash.
The Total Interest Income row
shows how much interest will be available for income at the beginning of
each year. The Principal Income row shows how much matured
principal will be available for income at the beginning of each
year. The Principal Income row also represents the purchase
price of the investments needed. The calculator assumes that
investments will be purchased at par value, or in other words
that the purchase price equals the maturity value (see disclaimer). It
also assumes that the first year's income will be met
with cash. The total
capital needed to fund the income ladder is the sum of the Principal
Income values, including the first year's cash income.
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