Worksheet: Retirement Savings
1 Annual retirement income you'll need in today's dollars. $25,000.00
(Your current comfortable annual income x 0.80)  
2 Annual income you'll need in inflation-adjusted dollars. (Assume 4% inflation)  
$25,000.00 x 1.04 $26,000.00
  Line 1   Factor A  
3 How much annual income do you expect to earn during retirement?  
$9,000.00 + $0.00 $9,000.00
  Social Security   Pension  
4 Additional annual income you'll need from savings and investments.  
$26,000.00 - $9,000.00 $17,000.00
  Line 2   Line 3  
5 Amount you must save to make up for retirement shortfall (20 years).  
$17,000.00 x 13.5903 $231,035.10
  Line 4   4% growth after inflation  
6 Amount you've already saved including IRAs, 401(k)s, etc. $460,000.00
       
7 At retirement, your current savings will be worth this much (assume 8%).  
$460,000.00 x 1.08 $496,800.00
  Line 6   Factor B  
8 Amount you still need to save.  
$231,035.10 - $496,800.00 -$265,764.90
  Line 5   Line 7  
9 Amount you need to save each year to reach your goal.  
-$265,764.90 x 1 -$265,764.90
  Line 8   Factor C  
Note: Factors are for retirement in 10 years.
  For 1 year: use A = 1.0400  B = 1.0800  C= 1.000
  For 2 years: use A = 1.0816  B = 1.1664  C= 0.4808
  For 3 years: use A = 1.1249  B = 1.2597  C= 0.3080
  For 4 years: use A = 1.1699  B = 1.3605  C= 0.2219
  For 5 years: use A = 1.2127  B = 1.4693  C= 0.1705
  For 10 years: use A = 1.4802  B = 2.1589  C= 0.0690
  For 15 years: use A = 1.8009  B = 3.1722   C = 0.0368
  For 20 years: use A = 2.1911  B = 4.6610   C = 0.0219
  For 25 years: use A = 2.6658  B = 6.8485   C = 0.0137
  For 30 years: use A = 3.2434  B = 10.0627  C = 0.0088
Friday, March 30, 2007