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The Complete Financial Workbook - Savings and Retirement Tabs

Updated: Dec 15, 2020

Welcome back!


Hopefully you've read my first post on the Info Sheet, Monthly Budget, and Net Worth tabs. This post will discuss the Savings and Retirement calculators. If you missed the first post, the theme is to make your inputs in gray cells and do not touch the yellow. Also, please download The Complete Financial Workbook and follow along, it is a free resource I made as a tool for everyone to use.


Savings Calculator

This calculator is similar to the Net Worth calculator in that there are no assumptions, all you need to do is enter the required information in the gray boxes. These calculators all use financial variables such as Present Value (pv), Future Value (fv), Payment (pmt), Rate (r), and Periods (nper). The formulas are all in excel and are fairly simple, but the point of this workbook is to remove the math and guesswork so that you have the data you need in order to make informed decisions. It is important to note that for each of the calculators, you need to fill out every gray box in order to calculate your desired variable.


Current Balance: This is the current balance of the account you are performing the calculation based on - either a savings, checking, retirement, or brokerage. This can be found by logging into your account or viewing the latest account statement. If you are solving for this, this number is the amount of money that you would need in your account to reach a savings target, given the deposit, number of periods, annual interest rate, and desired future value.


Yearly Deposit: If you are solving for this variable, this variable is the annual deposit required to meet your goal. If you are inputting this variable, it represents how much you intend to deposit annually to meet your savings goal (Future Value).


Years Until Money is Needed: If you are calculating this variable, it is the number of years required in order to reach your savings goal. If you are inputting this variable, it represents how many years until you want to achieve your savings goal (Future Value).


Annual Interest Rate: If you are solving for this variable, it is the annual interest rate required to meet your savings goals given your inputs. If you are inputting this variable, it is the annual interest rate your account earns. For checking and savings, this will be stated in your account information online or in your most recent account statement. For retirement or brokerage accounts, it is acceptable to use 7%, as that is the annual average return of the S&P 500.


Future Value of Current Balance: If you're calculating this variable, this is what your current balance will result in after payments, interest, and periods are conducted in accordance to your inputs. If you are inputting this variable in the other calculators, Future Value is the amount of money you want/will need to make a purchase. This number will be a savings target, or a home downpayment, college tuition, etc.


Retirement Calculator


The retirement calculator is a visual representation of your retirement fund. It shows how your money will grow annually, how much money you'l have in retirement, and how much money to expect as income during retirement. This is the most involved calculator in The Complete Financial Workbook. The gray cells are all inputs, if you hover over the red triangle you will see more detail and explanation for each variable and why I selected each default variable.


Similar to the Monthly Budget calculator, the variables in the middle table are items that you can change, but should only do so after reading each red triangle and having a good basis for making the change. The yellow table on the right displays the results of your inputs on an annual basis, up to 80 years from now. The table at the bottom of the frame shows how much you can expect your retirement account to be worth come retirement age and how much you will earn as retirement income based on your input in the Annual Income (%) from Retirement cell. Of note, the annual income growth assumption of 3% is standard, but keep in mind that this may not happen every year. It is important to pay attention to input this on your own, as wage growth is industry-dependent.


What is required to change is your current age, planned age at retirement, and annual earnings. This calculator assumes that you have $0 in retirement. If you want to see the future value of your current retirement, you can use the leftmost calculator in the Savings Calculator tab.


Once the aforementioned cells are populated, the calculator will show you the amount you will save annually, (salary*savings percentage) the beginning balance of your account (account value at the end of the prior year), the amount that you will draw during retirement (total account value * annual income from retirement), and the total value of your account (the accumulation of all deposits, interest, and any draws on the retirement fund).


That's it for these calculators and, as always, please feel free to contact me at steven@thefinancecompass.com


-Steven


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