Question

For the initial scenario, assume your current age, zero current savings, a retirement age of 60, a life expectancy of 95 years, an inflation rate of 3.5%, an investment portfolio return of 9% and current purchasing power of income of $75,000. Set up your worksheet to compute and show the user: (a) How much they will need to have the day they retire in order to fund their retirement with no additional contributions, (b) How much they will need to invest in the fund each year until retirement to reach that goal.

do a second scenario with retirement age of 70 and make a text section in which you explain the differences between retiring at age 60 and waiting until age 70. Which would you personally prefer and why? How will your choice affect your investing strategy for the next 20 years?

Answer 1

a) Amount which we should have on the day of retirement is $2,349,719.15

b)$193,600.01 will need to invest in the fund each year until retirement to reach that goal.

Please refer to the attached file for step explanation and calculation along with formula and cell referred.

second scenario with retirement age of 70

a) Amount which we should have on the day of retirement is $2,875,741.88

b) $193,820.08 will need to invest in the fund each year until retirement to reach that goal.

Retiring early ie at the age of 60 is more as you will be less affected by inflation and the retirement amount is also low as compared to amount when you retire at the age of 70 and more or less the yearly saving amount is same.

So i will chose retireing at the age of 60 and let the investment return help me in sustaining my life rather than working 10 more years.

My choice will not affect much of my investing strategy as the amount of yearly saving is more or less same but it will affect after retirement as the number of retired years is 10 year more therfore the interest which we will get from investment will be more ad will help to sustin my life.