Plan Your Financial Future planning for the financial aspects of retirement

[Albert Chan]

(10-19-2024 10:38 AM)SlideRule Wrote:  Step 2: Compute the lump-sum capital needed to generate this annual income
during the period of retirement:
      • PMT = $182,045 (You need to be in BEGIN mode if using
        the HP 10BII calculator, and the amount needs to be
        entered as a negative number.)
      • I/YR = 3.8835 (This is an inflation-adjusted rate of return,
        so enter 1.07 divided by 1.03, less 1, times 100 on your
        calculator.)
      • N = 20
      • Solve for PV = $2,596,849

Why suddenly use BEGIN mode? To "push-up" retirement number?
Had we use END mode, PV = $2,596,849 / 1.038835 < 2.5 million

Why would salary be fixed for 30 years, instead of closely matching inflation?
If income do match inflation, we can remove inflation as a factor.

lua> i = 0.038835 -- inflation-adjusted rate of return
lua> tvm(20, i, nil, -.75, 0)
10.2987055226939
lua> tvm(30, i, 0, nil, _)
-0.187229233167348

We need about 10 times salary savings for 20 years retirement.
This is about 18.7% saving (of gross) during 30 working years.