Securing a Comfortable Retirement: A Financial Plan

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Finance
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Table of Contents
Retirement situation.........................................................................................................................3
1....................................................................................................................................................3
2....................................................................................................................................................3
3....................................................................................................................................................4
4....................................................................................................................................................5
References........................................................................................................................................6
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Retirement situation
1.
Number of years to be taken at work to save $ 1000000 would be computed as follows:
Ag
e
Numbe
r of
Years
Starting
Salary
Annual
Investment
Employer
contribution
Total
Investment
Cumulative
Investment
with Gains
42 1
$
81,120
$
8,112
$
2,434
$
10,546
$
11,600
43 2
$
89,232
$
8,923
$
2,677
$
11,600
$
25,520
44 3
$
91,017
$
9,102
$
2,730
$
11,832
$
41,088
45 4
$
92,837
$
9,284
$
2,785
$
12,069
$
58,472
46 5
$
94,694
$
9,469
$
2,841
$
12,310
$
77,861
47 6 $ 104,163
$
10,416
$
3,125
$
13,541 $ 100,542
48 7 $ 106,246
$
10,625
$
3,187
$
13,812 $ 125,789
49 8 $ 108,371
$
10,837
$
3,251
$
14,088 $ 153,866
50 9 $ 110,539
$
11,054
$
3,316
$
14,370 $ 185,059
51 10 $ 112,749
$
11,275
$
3,382
$
14,657 $ 219,688
52 11 $ 115,004
$
11,500
$
3,450
$
14,951 $ 258,103
53 12 $ 117,305
$
11,730
$
3,519
$
15,250 $ 300,687
54 13 $ 119,651
$
11,965
$
3,590
$
15,555 $ 347,866
55 14 $ 122,044
$
12,204
$
3,661
$
15,866 $ 400,105
56 15 $ 124,485
$
12,448
$
3,735
$
16,183 $ 457,917
57 16 $ 126,974
$
12,697
$
3,809
$
16,507 $ 521,866
58 17 $ 129,514
$
12,951
$
3,885
$
16,837 $ 592,573
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59 18 $ 132,104
$
13,210
$
3,963
$
17,174 $ 670,721
60 19 $ 134,746
$
13,475
$
4,042
$
17,517 $ 757,062
61 20 $ 137,441
$
13,744
$
4,123
$
17,867 $ 852,422
62 21 $ 140,190
$
14,019
$
4,206
$
18,225 $ 957,712
63 22 $ 142,994
$
14,299
$
4,290
$
18,589 $ 1,073,931
Thus it can be seen that the amount of $ 1,000,000 can be saved if I work for 22 years
considering the investment made every year and return on investment is 10% per year
compounded cumulatively.
2.
Amount of $ 1,000,000 would last for following period if $ 5000 per month is spent as living
expenses:
Total Monthly expenditure = $ 5000
Total number of months to spend $ 1,000,000 = 1000000/5000 = 200 Months
Conversion of months to Years = 200/12 = 16.67 Years or 16 Years and 8 months
3.
Computation of age at which I should retire to receive $ 5000 per month at the age of 100:
Ag
e
Numbe
r of
Years
Starting
Salary
Annual
Investment
Employer
contribution
Total
Investment
Cumulative
Investment
with Gains
42 1
$
81,120
$
8,112
$
2,434
$
10,546
$
11,600
43 2
$
89,232
$
8,923
$
2,677
$
11,600
$
25,520
44 3
$
91,017
$
9,102
$
2,730
$
11,832
$
41,088
4

45 4
$
92,837
$
9,284
$
2,785
$
12,069
$
58,472
46 5
$
94,694
$
9,469
$
2,841
$
12,310
$
77,861
47 6 $ 104,163
$
10,416
$
3,125
$
13,541 $ 100,542
48 7 $ 106,246
$
10,625
$
3,187
$
13,812 $ 125,789
49 8 $ 108,371
$
10,837
$
3,251
$
14,088 $ 153,866
50 9 $ 110,539
$
11,054
$
3,316
$
14,370 $ 185,059
51 10 $ 112,749
$
11,275
$
3,382
$
14,657 $ 219,688
52 11 $ 115,004
$
11,500
$
3,450
$
14,951 $ 258,103
53 12 $ 117,305
$
11,730
$
3,519
$
15,250 $ 300,687
54 13 $ 119,651
$
11,965
$
3,590
$
15,555 $ 347,866
55 14 $ 122,044
$
12,204
$
3,661
$
15,866 $ 400,105
56 15 $ 124,485
$
12,448
$
3,735
$
16,183 $ 457,917
57 16 $ 126,974
$
12,697
$
3,809
$
16,507 $ 521,866
58 17 $ 129,514
$
12,951
$
3,885
$
16,837 $ 592,573
59 18 $ 132,104
$
13,210
$
3,963
$
17,174 $ 670,721
60 19 $ 134,746
$
13,475
$
4,042
$
17,517 $ 757,062
61 20 $ 137,441
$
13,744
$
4,123
$
17,867 $ 852,422
62 21 $ 140,190
$
14,019
$
4,206
$
18,225 $ 957,712
63 22 $ 142,994
$
14,299
$
4,290
$
18,589 $ 1,073,931
64 23 $ 145,853
$
14,585
$
4,376
$
18,961 $ 1,202,181
65 24 $ 148,771
$
14,877
$
4,463
$
19,340 $ 1,343,673
66 25 $ 151,746
$
15,175
$
4,552
$
19,727 $ 1,499,740
67 26 $ 154,781
$
15,478
$
4,643
$
20,122 $ 1,671,848
5

68 27 $ 157,876
$
15,788
$
4,736
$
20,524 $ 1,861,609
69 28 $ 161,034
$
16,103
$
4,831
$
20,934
$ 2,070,798
Thus from the above table, it can be analyzed that if I retire at the age of 69 then I would be
requiring the following amount:
Amount required per month $ 5,000
Total number of Years left after retirement 31
Number of months in a Year 12
Total Amount required after retirement $ 1,860,000
Thus it can be seen that if I retire at the age of 69 and living on until the age of 100 than in that
case I would be requiring an amount equal to $ 1860000 for the whole period to cover $ 5000 per
month for the period of 372 months or 31 years.
4.
Cash Flow Diagram for Situation 1:
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Cash Flow Diagram for Situation 2
7

References
 Rajoria, C.S., Agrawal, S., Dash, A.K., Tiwari, G.N. and Sodha, M.S., 2016. A newer
approach on the cash flow diagram to investigate the effect of energy payback time and
earned carbon credits on life cycle cost of different photovoltaic thermal array systems.
Solar Energy, 124, pp.254-267.
 Scilly, M., 2019. The Concepts of Simple Interest & Compound Interest. [online]
Smallbusiness.chron.com. Available at: https://smallbusiness.chron.com/concepts-
simple-interest-compound-interest-55341.html [Accessed 29 Jul. 2019].
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