Very simple retirement calculator
A simple retirement calculator that helps users estimate their savings and post-retirement income. Users can input their starting age, total savings, retirement age, and expected investment growth. The sheet provides two options: the first estimates how much money will be available after retirement based on current savings, while the second calculates the necessary monthly savings to achieve a desired post-retirement income. Key outputs include final savings amounts, fees paid, and monthly income projections.
Content article
This article details a very simple retirement calculator that helps individuals plan their financial future based on various inputs and assumptions.
In the "Inputs" tab, users are first instructed to make a copy of the spreadsheet for personal use. The calculator requires several key inputs: a starting age of 25, a total amount already saved of $10,000, and an intended retirement age of 65. Users are prompted to consider their annual investment fees, which are set at 1.00%, and to estimate their expected annual investment growth above inflation, recommended at 6.00%.
The calculator presents two options for users. In Option 1, individuals can determine how much money they will have after retirement based on their current savings rate. For this option, users need to input their monthly savings amount, which is set at $4,000, and decide on a withdrawal percentage after retirement, commonly suggested at 4.00%.
Option 2 focuses on how much money users should save monthly to achieve a desired post-retirement income. Here, the current gross monthly income is noted as $20,000.
The "Results" tab provides insights based on the inputs. For Option 1, the final amount saved by retirement would be approximately $6,173,359, with fees totaling around $849,472. This would result in a monthly income of about $20,578 after retirement, before taxes. In contrast, Option 2 indicates that to reach a post-retirement monthly income of $16,000, users would need a total savings of $4,800,000, requiring a minimum monthly savings of $2,997.
The "Calcs" tab outlines the detailed calculations month by month. Starting from age 25 with an initial savings of $10,000, the first month shows a growth of $70, leading to a total of $14,058 by the end of that month after saving $4,000 and accounting for fees. As the months progress, the growth increases, with the end of month totals steadily rising. For instance, by the end of the 12th month, the total savings amount to $59,832.
Continuing through the years, the monthly contributions and growth compound, with the savings reaching $200,685 by age 43. As users approach retirement age, the final figures reflect substantial growth, with the total savings at age 58 reaching $275,640.
This calculator serves as a useful tool for individuals planning their retirement, illustrating the importance of consistent savings and the impact of investment growth over time.