Planning Your Retirement

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Planning Your Retirement

• By Dustin Ward
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Table Of Contents

• Retirement Questions
• Prospective Retirement
• Trial 1 (Age 22)
• Trial 1 (Continued)
• Trial 2 (Age 32)
• Trial 3 (Age 37)
• Trial 4 (Age 42)
• Trial 5 (Age 47)
• Glossary
• Works Cited

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Retirement Questions and Variables
Throughout this presentation one will learn how
to successfully save for retirement and emphasize
the importance of starting your saving early.

• First, one needs to ask about a few key factors
  for their retirement plan. Here are the questions
  and the assumptions we will be making...
• What portion of the income is needed for a year
  of retirement? 70 of an average years salary
• What is the starting salary? 39,932.67
• At what age will you retire? 67
• How much interest will be received yearly? 5
• What is the average inflation rate? About 2.54
• With these variables set, then we can see how
  much money would need to be saved yearly if we
  start saving at various age intervals .

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Prospective Retirement

• If our starting salary is 39,932.67 after 45
  years of working the salary equivalent would be
  182,146.96.
• Assuming these circumstances, the average salary
  over those 45 years would be about 111,039.82.
• If that is the case, I would need 77,727.87 for
  every year of my retirement. (70 of the average
  salary)
• Since the average life expectancy is 78 years, I
  would need about 645,640 for my retirement,
  considering I will still make interest while
  retired.

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Trial One (Age 22)

• So now were going to see how our retirement plan
  works if one starts saving at age 22, and plans
  on retiring at 67 (after 45 years of work).

As you can see, as the years go on the interest
really begins to make a huge difference. If one
begins saving at 22 as we do in this example they
will retire with about 645,640 in their
retirement fund with small yearly deposits.
Based on our life expectancies, that should be
just about the right amount.
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View Excel Data
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Trial 1 (Continued)

• Trial one netted our retirement fund the 645,640
  we needed while only contributing a little over
  4,000 a year.
• With our life expectancy of 78 and retirement age
  of 67, this money would need to last 11 years.
• This table shows how quickly the money in the
  fund will depreciate as the retirement goes on.
  Save up!

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Trial 2 (age 32)

• Now were going to explore a retirement plan if
  you dont start saving until age 32.

In this example, since we waited 10 years to save
one would have to contribute a little over 7,000
a year to hit our 645,650 that we wish to retire
with. After retirement, the money will depreciate
the same way it did before, however, the payments
are much bigger this time because of the 10 year
grace period.
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Trial 3 (Age 37)

• Now, were going to consider if one waits 15
  years to start saving for retirement.
• This time one would have to save almost 10,000 a
  year to accumulate enough for retirement.
• Waiting 15 years to start saving increased the
  yearly payments by about two and a half times
  from 4042.83 to 9717.81
• The reason for this huge increase is the interest
  doesnt have as much time to make a big
  difference. In Trail 1 we had been collecting
  interest for 25 years by age 47. In Trial 3, just
  10. In both scenarios a similar amount of money
  had been put into the Fund total, yet in Trial 1,
  the Retirement fund has accumulated 206,643.
  While in Trial 3, the fund has only accumulated
  169,111.

View Excel Data
Click here to learn about Lincoln Financials
retirement planners
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Trial 4 (Age 42)

• As we further delay the retirement planning
  process the deposits continue to grow rapidly. A
  retirement becomes difficult to plan at this
  point. It can still be done, but it might require
  some financial creativity and part time working
  that otherwise wouldnt have been necessary.

• At age 42, the yearly deposit takes another big
  jump, this time to 13,527.75
• At 13,527.75, the payments now are almost three
  and a half times that of the payments at age 22.

View Excel Data
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Trial 5 (Age 47)
Planning your retirement this late is very
difficult and requires much more money than if
you start early. Click here for tips on how to
still manage a decent retirement fund after
neglecting the savings for so long.

• As you can see, starting your savings this late
  caused a dramatic increase in how much money
  needed to be contributed to the fund to net the
  same amount at the end.
• By age 47 one would have to put over double the
  amount of money in than if they started at age
  22.
• In conclusion, SAVE EARLY!

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Glossary

• Interest The rate at which deposited money will
  grow.
• Inflation The rate at which moneys value
  depreciates.
• Salary Equivalent What the starting salary would
  be at any certain year in the future (for our
  example, age 67).
• Average Life Expectancy Expected Life span of a
  person born in a specific year.

Back To Slide 3 Back To Slide 4
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Works Cited

• http//www.ssa.gov (Social Security
  Administration)
• http//www.cdc.gov/ (Center For Disease Control
  and Prevention)
• http//www.lfg.com/ (Lincoln Financial Group)
• http//financialplan.about.com/ (About Financial
  Planning)
• http//moneycentral.msn.com/ (MSN Money Central)
• https//www.fidelity.com/ (Fidelity Investments)
• http//money.cnn.com/ (CNN Money)
• http//www.signonsandiego.com/ (San Diego
  Union-Tribune)
• http//inflationdata.com/ (Inflation Data)

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