Income Ladder Calculator

What is an Income Ladder?  An income ladder is created by purchasing a series of fixed-rate investments with staggered maturity dates such that the combination of interest and matured principal provide the desired income.  The concept is similar to that of a traditional Bond Ladder except that when investments mature, they are used to provide income rather than to purchase more bonds.  When the fixed-rate investments are insured or guaranteed, such as with bank CDs and US Treasuries, an income ladder is one of the best ways to achieve a predictable stream of investment income.  Use this calculator to determine the schedule of investments needed to meet your income needs for up to 15 years.  A more detailed free online calculator, an example, and more information about income ladders is available at: www.IncomeLadders.com

Disclaimer:  This calculator assumes that investments will be purchased at par value (purchase price equals the maturity value).  This is generally the case for newly issued fixed-rate investments.  This calculator should not be used for investments that will be purchased at a discount or premium to their maturity value.  While we have strived to create a robust calculator, IncomeLadders.com does not guarantee the accuracy of the calculations or their suitability for any particular purpose.  The user of the calculator assumes full responsibility for determining whether the calculator will achieve the results desired by the user.  The user assumes full responsibility for selecting all investments under the user's plan.

Step 1.  Enter your desired annual income amounts for up to 15 years.  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.  
  Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15

Desired Income

 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $
       (Cash) 
     

Step 2.  Enter the annual yield rates in the second row.  For example if you will be funding your income ladder with bank CDs, and your bank offers a 1.8% annual percent yield (APY) for CDs held for one year, a 2.5% APY for CDs held for two years, etc., enter these 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.  
   
After
1 Year
After
2 Years
After
3 Years
After
4 Years
After
5 Years
After
6 Years
After
7 Years
After
8 Years
After
9 Years
After
10 Years
After
11 Years
After
12 Years
After
13 Years
After
14 Years

Annual Yield Rates

   % % % % % % % % % % % % % %
      

Step 3.  Select whether interest will be withdrawn each year or only when investments mature.  Always click one of the buttons to recalculate the income ladder after making changes to either the income amounts or the yield rates.

 

  

Calculations
The Principal Income row shows both the purchase price and the maturity value of the investments at each yield rate.  The calculator assumes that the purchase price equals the maturity value.  It also assumes that the first year's income will be met with cash.
Principal Income $ $ $ $ $ $ $ $ $ $ $ $ $ $ $
                               
The Total Interest Income row shows how much interest will be available for income at the beginning of each year.
Interest Income $ $ $ $ $ $ $ $ $ $ $ $ $ $

 
The Total Income row shows the sum of principal and interest that will be provided by the income ladder each year. 
Total Income $ $ $ $ $ $ $ $ $ $ $ $ $ $ $
                               
Total Capital Needed to Fund the Income Ladder $

 (including the first year's cash income)

            
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