This calculator takes three growth factors into account and solves for the percent of savings necessary to maintain a specified lifestyle at retirement. The three growth factors are: 1.growth of expenses (required income) due to inflation 2.growth of income 3.growth of savings
Once all assumptions are entered, the growth factors are used to develop answers to the following questions: •How much will my income be at retirement? •How much will my savings be at retirement age? •How much income will I need at retirement age? •How much of my current and future income must I save to retire with the same standard of living? |
No script is provided for this screen. |
The solutions are calculated and presented in a worksheet format. The columns are calculated as follows: Required Income at Beginning of Year (BOY) = Starting Income OR Prior Year End of Year (EOY) value Inflation Adjustment = Required Income at BOY * Inflation Rate Assumption Required Income at EOY = Required Income at BOY + Inflation Adjustment Projected Income at BOY = Starting Income OR Prior EOY value Increase in Income = Projected Income at BOY * Annual Income Growth Assumption Projected Income at EOY = Projected Income at BOY + Increase in Income Savings Balance at BOY = Starting Balance OR Prior EOY value Earnings on Savings = Savings Balance at BOY * Net Rate of Return Assumption Deposit to Savings from Income = Projected Income at EOY * calculated Savings Factor Savings Balance at EOY = Savings Balance at BOY + Earnings + Deposit Potential Income from Savings = Savings Balance at EOY * Net Rate of Return Assumption
The Savings Factor (percent of income required to save) is calculated by iteration. |