- A B U C D F G H 1 2 3 4 5 6 E Key Inputs Initial Salary Pre Retirement Inflation Rate Retirement Inflation Rate Salary G 1 (40.87 KiB) Viewed 25 times
savings and
spending information in the Retirement Spending and Savings tab.
You can
choose to structure the problem on an annual basis, monthly basis,
or other
frequency. In the “Key Inputs” section, put in your new initial
salary. Also,
enter your assumed salary growth rate.
B) Decide upon an initial amount of money you want to spend in
retirement and
how much you want to leave as an inheritance (or alternatively, a
buffer in
case you live longer than expected). To make this concrete, choose
these
amounts in today’s dollars. You will adjust these amounts to
account for
inflation later.
C) Choose your retirement date and end of problem (death) date.
Fill out your
salary for each period given your initial salary and salary growth
rate.
D) Put in starting percentages for the Pre-Retirement Inflation
Rate, Retirement
Inflation Rate, Portfolio Return Pre-Retirement, and Portfolio
Return
Retirement in the “Key Inputs” section. Any reasonable guesses will
suffice.
E) Using these starting values, determine the initial spending
amount after you
retire and subsequent retirement spending for the rest of the
problem. Using
your retirement spending, salary, and portfolio return information,
calculate
the savings contributions and retirement account balance needed
each
period during your career to afford this retirement plan. Calculate
the
percent of your salary you need to save each period in the Required
Savings
Percentage box of the “Key Output” section.
F) Graph the Retirement Account Balance over time for your
problem.
A B U C D F G H 1 2 3 4 5 6 E Key Inputs Initial Salary Pre-Retirement Inflation Rate Retirement Inflation Rate Salary Growth Rate Spending Growth Rate Initial Spending Amount (Today's dollars) Inheritance Amount (Today's dollars) Portfolio Return Pre-Retirement Portfolio Return Retirement Key Output Required Savings Percentage 7 8 9 10 11 12 13 Period Salary 0 Savings Contribution Spending Amount Inheritance Initial Savings Retirement Account Balance 0 1 14 Date 15 16 17 18 19 W NA 2 3 4 20 21