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Figuring out how to do this
Old 08-04-2017, 07:37 AM   #1
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Figuring out how to do this

Hi everybody. I have recently been filling out an excel sheet to try to project estimated future account balances. It might not really be useful since I am projecting 20 years into the future but I like to be reassured and also show my wife we will be able to stop working much sooner than what the people on the news tell us.

I want to make sure I am doing this properly. For my IRA I took the balance on 8/1/17 of $8414.43. I have no earnings tied to that income until 8/1/2018 when I add another $5500 contribution and $974.01 which is 7% of the total (13914.43). This makes my estimated balance on 8/1/18 14888.44. Is this the way to calculate this? I'm hoping I explained that clearly. I'm at work so I cant attach a copy of the spreadsheet. I'm not great with excel and I didn't even really know how to do formulas until Tuesday.

Should I assume a 7% average earning every year? I have seen most places say that is the average long term earning. Should I calculate the earning before or after the contribution is made? Would I need to reduce that amount to factor in fees on my accounts (.14%-.4%)? I make contributions bi-weekly from paychecks and monthly from my checking account so my spreadsheet estimating these things annually isn't going to be spot on anyway. I'm just trying to get a rough idea.

In 15 years I changed the earning from 7% to 4% under the assumption we will by trying to play it safe at that point. Does that seem like a good number to pick or should it be lower? Should I reduce the amount sooner than year 15 out of 20?

I plan to update this august 1st of every year. Even though this will probably not be accurate at all, I can see that after I am 59.5 we should be set. I definitely have some work to do in a regular investment account to support us until we are 59.5. My wife qualifies for a reduced pension type plan with insurance when she is 50. She has no plans to work even 1 day past that point and I am completely on board with that. I will be 51 when that happens so we will need to put away some serious money to support us for 8.5 years with 5 of those years still including a mortgage payment.

Thanks for any help that can be offered!
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Old 08-04-2017, 09:15 AM   #2
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If that $5,500 is added to the IRA on 8/1/2017 then your calculation makes sense... however, if you make contributions over the year then the $974.01 is too high and there would be a future compounding effect. Also, where is the $5,500 coming from because if from a brokerage account then there may be a corresponding opposite impact.

Have you considered trying out Quicken Lifetime Planner? It is a very intuitive retirement planner included in Quicken Deluxe and higher and allows one to easily develop a reasonably robust retirement plan and look at how certain changes in assumptions change your retirement asset balances.

I used it for many years and also defined all my accounts to Quicken so I could monitor my progress and see how my plan was progressing.
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Old 08-04-2017, 09:37 AM   #3
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Quote:
Originally Posted by Donny68 View Post
Hi everybody. I have recently been filling out an excel sheet to try to project estimated future account balances. It might not really be useful since I am projecting 20 years into the future but I like to be reassured and also show my wife we will be able to stop working much sooner than what the people on the news tell us.
.
Should I assume a 7% average earning every year? I have seen most places say that is the average long term earning. Should I calculate the earning before or after the contribution is made? Would I need to reduce that amount to factor in fees on my accounts (.14%-.4%)?

In 15 years I changed the earning from 7% to 4% under the assumption we will by trying to play it safe at that point. Does that seem like a good number to pick or should it be lower? Should I reduce the amount sooner than year 15 out of 20?

Thanks for any help that can be offered!
I can not help with the whole spreadsheet stuff. But the 7 % & 4 % assumption is not workable. I just posted on this in another thread, I thought returns were going to be 16 % forever in the 90's. we hit 10 years of 0 % for the last decade. Just keep plugging away with saving, when you get closer to your 20 year time horizon you will know what you have
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Old 08-04-2017, 09:44 AM   #4
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I'll have to check out Quicken. I figured what I was doing was a little off. thanks
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