How do I include anticipated savings prior to my retirement date?
There is an easy and straight forward way to do this. Just simply include in the balance sheet a line item in the cash column. Call it whatever you want: additional savings, payments, etc. then put in the anticipated value of those savings that you expect to have at retirement.
For example, if you still have 10 years left before your expected retirement date and you plan to save another $10,000 per year, then the total would be $100,000. You can also use any simple interest calculator to show the impact of growth on the annual savings if you expect to save and not retire for at least another 5 years or so. If retirement is less than 5 years away, don’t make it more complicated than it needs to be…just drop in a lump sum that you think you may have saved by then. So put that value in the balance sheet and include those assets in one of the baskets.
What is nice is you can put in several hypothetical savings numbers and only “check” the one you want for each scenario to include it in the total assets available. Let’s say for example you are fairly certain you can sock away at least another $50,000 before retirement. More likely you expect another $100,000. If you are lucky you may be able to save another $200,000, but you feel that may be a stretch.
So you can look at all 3 scenarios (or as many as you like) by “checking” and “un-checking” this new savings asset in your balance sheet.
Now you have a low risk, med risk and high risk numbers to compare side by side.
Place all 3 of these in the balance sheet and only select one at a time to compare the different scenarios.
By doing this you can easily see the impact of saving additional money prior to your retirement date. How much more do you need to save before retirement? Have you already saved enough but simply need to continue working for a few more years before you start to draw from you assets?
These types of questions can be answered by including an additional line item in the balance sheet that represents future money to be saved.
Tags: Retirement Calculator, Retirement Planning, Retirement Planning Software