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Spreadsheet for calculating life of retirement assets
Old 03-11-2007, 11:34 PM   #1
Dryer sheet wannabe
Join Date: Jan 2006
Posts: 10
Spreadsheet for calculating life of retirement assets

All, I have developed a excel spreadsheet that I hope others will find useful. It takes the following variables:

yearly expenses 46000 (amount spent, the spreadsheet adjusts for taxes)
starting amount 600000 (total of IRAs and Savings)
interest rate 0.05 (user determined, I'm conservative)
SS monthly 1677 (Social Security in today's dollars)
inflation rate 0.035 (Projected inflation rate, i.e. my guess)
Age 49

The spreadsheet calculates how long before your initial assets will run out. The variables are robust i.e. can change the yearly expenses, starting amounts, or what you think would be appropriate for inflation and rate of interest you project you will earn. Also, the spreadsheet has included space for a reverse mortgage when you reach age 62.

the first two lines look like this: Social yearly
Starting Interest Projected Social Sec Adj Expenses
Age Amt Earned Expenses Pension Security for inflation Adj for inf
49 600,000.00 30,000.00 46,000.00 0.00 0.00 20,124.00 46,000.00
50 689,000.00 34,450.00 47,610.00 0.00 0.00 20,828.34 47,610.00

Hope some find this useful,


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Re: Spreadsheet for calculating life of retirement assets
Old 03-12-2007, 12:56 PM   #2
Full time employment: Posting here.
Join Date: Sep 2006
Posts: 608
Re: Spreadsheet for calculating life of retirement assets

Originally Posted by tlg501
Hope some find this useful,
Thanks Terry, something like this is somewhat useful, but in a limited way, because
it can produce overly-optimistic results.

The reason (if I am not mistaken) is that you assume inflation and ROR are constants.
In real life, they vary dramatically from year-to-year. Most siginificantly of all, the
premium of ROR over inflation varies dramatically and will sometimes go negative.
These periods can really hurt one's portfolio and it's critical to design your strategy
to survive them without damaging your portfolio too badly. A spreadsheet such as
your's provides little insight in this regard. That's why historically-based (like
FIRECalc) and Monte-Carlo calculators are so popular and useful.


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Re: Spreadsheet for calculating life of retirement assets
Old 03-12-2007, 01:09 PM   #3
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Re: Spreadsheet for calculating life of retirement assets

For something similar that is very well accepted check out the "Optimal Retirement Calculator" - which goes by the name ORP...
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