Tuesday, October 27, 2009

A Retirement Planning Calculator / Spreadsheet


Putting it All Together

Retirement planning can be thought of as consisting of two phases:
  1. The accumulation phase -- saving for retirement
  2. The distribution phase -- living in retirement
In the previous two posts in this series, we looked first at establishing a target for the savings needed to cover expenses during the retirement years, and then at creating a savings plan to reach that target. In this post, we'll add some enhancements to our retirement planning Excel spreadsheet in order to create a consolidated accumulation and distribution plan -- we'll put it all together. This, in turn, will give us a foundation to do some additional analysis in future posts.

Note: For a quicker estimate of how much you'll need to save, see the graphs in How Much Money Will You Need to Retire?,  What Percent of Your Salary Should You Save For Retirement? (by starting age), or percent to save with higher incomes.

A Consolidated Retirement Accumulation & Distribution Plan

Retirement Planning: Graph showing retirement plan from Excel spreadsheet/calculator
Consolidated Retirement Saviings Accumulation & Distribution Plan

The graph above shows a retirement plan for a 35 year old, Alex, who hopes to retire at age 65 and live to age 90 (click on graph to expand it. See the end of the post for a link to the spreadsheet). Alex has no savings yet, but is planning to save 13 percent of salary from now on. Alex plans to put 3% of pay into taxable accounts and split the remaining 10% equally between

Sunday, October 25, 2009


Just so there is no misunderstanding.... My intent is not to give financial or legal advice to anyone; that would require detailed information about your specific situation. The information, tools and analysis provided on this site were initially developed for my own personal use. I hope it's obvious that I cannot guarantee their accuracy or applicability to your individual circumstances. I can assure you that I have found this material useful for me; I hope you will find it useful as well in doing your own analysis.

This work is licensed under a Creative Commons Attribution 3.0 unported license.

Saturday, October 17, 2009

What Percent of Your Salary Should You Save For Retirement?

Note: If you're looking for the quicker, ballpark, estimate of how much you'll need to save, see the easy-to-use graphs in What Percent of Your Salary Should You Save For Retirement? (by starting age, with Social Security)percent to save at higher incomes, or without Social Security.)

"What percent of my salary should I save?" is a frequently asked question -- especially early in one's career. People often ask the question implicitly assuming there is a standard, magic percentage of your pay that works for everyone. I think the most honest answer is "it depends." In this post, we'll add some additional capabilities to my retirement calculator so that you can understand what the answer depends on and use the calculator to determine a percentage that works for you. (The download link is at the end of the post.)

Pat's Retirement Savings Plan

Graph. What % (percent) of salary plan to save

In How Much Money Will You Need To Retire?, we looked at a hypothetical 25 year old, Pat, who wants to retire at age 65 and have $45,000/year in today's dollars for after-tax living expenses (not income) during a 20 year retirement. The retirement calculator introduced in that post estimated that

Thursday, October 1, 2009

How Much Money Will You Need To Retire??

How much in savings will you need to retire? A lot -- even many of you who are among the vanishing breed of employees who have traditional defined benefit pension plans. In this post I will introduce a spreadsheet to help you estimate the amount you need to save. I'll also provide a simple rule of thumb for those who prefer a shortcut. (see Rule of Thumb below)

Retirement planning: Savings needed vs life expectancy graph
Retirement Savings Needed vs Life Expectancy
This series of posts will not only help you estimate how much you will need to save, and help you develop a plan to save that much, it will also help you understand the whys. Understanding the issues, and the assumptions that traditional retirement planning software packages typically make will, I hope, decrease the chances that you will misinterpret or misuse their results; this, in turn, will increase the chances of your living the retirement of your dreams.

How Much Will You Need in Retirement Savings? (In Then-Current Dollars)

For many people, the biggest savings challenge they will face is