Financial Calculator - Financial Independence 101 Course
Financial calculator for use with the book, Financial Independence 101, A Simple Strategy For Building Wealth, or separately, with lessons from the course on this website, Financial Independence 101, A Post-Graduate Course In Prosperity.
NOTE: Some browsers cannot "see" the following spreadsheet, and/or cannot interact with it. If you experience this problem, send an email with the subject "Calculator" to info@financialindependence101.com and we will reply with the spreadsheet as an attachment for you to save and use on your own computer.
Interactive 401k Calculator
Developing Your Personal Estimates
This financial calculator can be used to estimate the value of any of your investment accounts at retirement age (or any age you choose) based on variables that you provide, such as age, salary, percent of salary contributed, company matching contribution percentage (if any), assumed rate of return, and desired retirement age. These are estimates only, for planning purposes, because rate of return, of course, cannot be controlled or guaranteed.
Using the calculator
The calculator is used by clicking sequentially on cells H3 through H9 and replacing the defaults with your own personal data. Begin by clicking on cell H3 and inputting your pre-existing savings balance if you have one, and then hitting enter. Then move down the column to H4, H5, etc. replacing the defaults with your own information followed by the enter key. When you finish, cell H11 will reflect your expected balance at the retirement age you selected. You'll be able to see how this balance was developed, if you wish, by scrolling down the spreadsheet.
Helpful exercises
What is the cost of waiting to begin my program? It's instructive to enter gradually ascending ages to cell H4 to appreciate the importance of starting an investment program as early as possible. First enter your actual age and note the estimated balance at retirement, and then simply increase the age figure by one or more years and witness the impact this has on your estimated balance.
What if I'm able to earn a better salary? Perhaps you have the opportunity to significantly increase your salary level through further education or accreditations and you'd like to see the impact this would have on your retirement balance. Experiment with figures in cell H5. The program automatically raises your salary by 2.5% per year.
What if I increase or decrease my percentage contribution? You'll want to experiment with this figure in cell H6 to see how raising or lowering your percentage impacts your final balance. The percentage must be stated as a decimal as shown by the default (.06 equals 6%). Be sure never to set your percentage contribution below the level needed to capture any maximum company match.
What if the company match changes through merger or changing jobs? If this is a 401(k) account it may be useful to see the impact of this by changing cell H7 if a merger or job change is contemplated.
What is the impact of a higher or lower rate of return? This is the variable over which we have the least control. We use a rate of 10% when invested in an S&P 500 Index type of fund because this is in keeping with historical returns. There is no guarantee, of course, that we will experience such returns in the future. It's instructive, however, to compare your results at 10% to results attained at 8%, 6%, etc. to understand the importance of this variable on overall results.
What if I retire earlier or later than age 65? Experiment with figures from 55 to 70 in cell H9 to see whether you should go early or stay late, if this is of interest to you.
Additional Resources
If you've not yet checked out our free online course, Financial Independence 101, A Post-Graduate Course In Prosperity, you can do so by simply clicking on the Home button at the upper left of this page. The course is based on our highly acclaimed hardcover book, Financial Independence 101, A Simple Strategy For Building Wealth, which provides you with the game plan for accumulating wealth. For further details click on FI101-The Book.
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