| | RETIREMENT EXAMPLE |
| | | | Financial calculator keys | | Current Age | Retirement Age |
| | # of Years to retirement | 30 | N | # of periods | 35 | 65 |
| | Annual Level Salary (2016 dollars) | $ 85,000 |
| | Savings Rate (of gross salary) | 15% |
| | Annual Savings (2016 dollars) | $ 12,750 | PMT | annuity amt |
| | Real Investment Rate (excluding inflation) | 2.5% | I/Y | Rate of return |
| | Beginning Balance in Retirement Account | $ - 0 | PV | Present value |
| | Ending Balance in Retirement Account (working phase) | $559,759.47 | FV | Future Value |
| | | Excel FV function |
| | If I make $85,000 per year in today's dollars every year for 30 years and I say 15% I will save $12,750 per year in Today's dollars. If I can invest this money at 2.5% over the inflation rate every year, I will end up with $559,759 in my account after 30 years. |
| | Beginning Balance in Retirement Account (retirement phase) | $559,759.47 | PV | Present Value |
| | # of years planned in retirement (maximum life expectancy) | 20 | N | # of periods |
| | Real Investment Rate (excluding inflation) lower than during working years to be more conservative | 1.50% | I/Y | Rate of return |
| | Ending Balance in Retirement Account (retirement phase) | $ - 0 | FV | Future Value |
| | Maximum Withdrawal per year | ($32,603.60) | PMT | Annuity Amt |
| | If I expect to live for 20 years in retirement and I can achieve 1.5% over inflation return on investing my retirement account conservatively, I will be able to withdraw $32,603 at the end of each year for twenty years before the balance drops to zero. |
anglia85
retirement_example-2.xlsx
