This tool demonstrates the financial impact of starting a savings plan early. For example, a 25-year-old person who starts saving $2,000 each year, earns 10% return, and saves for only 10 years; will have $611,817 at age 65. Contrast this to someone who saves every year from age 25 to age 65. To achieve the same $611,817, they must save $1,257 every year. Also, refer to the "Procrastination" calculator which is similar, but has a fixed contribution each year and allows you to vary the years of delay. To use this calculator, first enter contributions in the left table. Then click Calculate. A new table will appear on the right of the screen. Click any purple cell on the right table. The program will calculate the annual payment required for each year from the year you clicked to retirement age so you will have the same retirement balance as in the left table. These equal annual payments will compound to the same amount as the Retirement Age balance shown in the left table. |
No script is provided for this screen. |
The following assumptions are made: •Savings contribution made at the beginning of each year. •Annual compounding. •A tax free investment or after tax return is used. The tool uses two simple investment spreadsheets to solve for the future value of each scenario. This tool shows an extra row (year) at the bottom of the documentation spreadsheets. This provides additional information by displaying the first year of retirement. The values displayed by the program are from the beginning of the year, as opposed to end of year values. For example, if a 35-year-old person starts saving at the beginning of each year and plans to retire in 30 years, they will have worked 30 years at the beginning of age 65. Their savings occurred from age 35 to 64 (inclusive), the 65th year (row) is just for information. |