1. I would like to retire in 42 years at the age of 65. The average retirement age for women is between 60-62 years of age, and 62-64 for men.
2. My annual amount of money I'll need after retiring would be approxiamately $26,500 (2,205*12=$26,460) using my cost today.
Expense
Cost per Month
Rent
$1,000.00
Lights
$80.00
Cable/Internet/Phone
$150.00
Groceries
$250.00
Cell Phone
$95.00
Car Insurance
$155.00
Toliotress
$50.00
Clothing
$50.00
Beauty
$75.00
Miscellanous
$50.00
Childcare
$200.00
Total:$2,205
3. Assuming a 3% inflation rate per year from now till the day you retire, how much will you need per year at retirement?
4. Assuming you will live after retirement for 30 years and get a 6% annual rate of return, how much money do you need at retirement? (The day you retire)
5. Considering what you currently have saved for retirement (If none start with $2,000), how much will you now need at retirement? (Choose your own rate) This will reduce the amount calculated in #4
6. How much money will you need to save per year from now till retirement to reach your retirement goal, given a 9% annual return?
7. Assuming you pass 10 years earlier than expected, how much money will be left to pass on to your loved ones?
Why would you need to budget for childcare in retirement?
50,000.00
1. To determine your retirement age, you need to calculate the difference between your desired retirement year (42 years from now) and your current age. Subtract your current age from 65 (the age at which you want to retire) to find the number of years until retirement.
2. To calculate your annual retirement expenses, add up the monthly expenses listed and multiply by 12 (months in a year). In this case, the total comes out to be $26,460.
3. To calculate the amount you will need per year at retirement considering a 3% inflation rate, you need to apply the inflation rate to your current annual expenses. Multiply your current annual expenses ($26,460) by 1.03 (100% + 3%) to account for inflation. The result will be the amount you need per year at retirement.
4. To calculate the amount of money you need at retirement, assuming a 6% annual rate of return and a 30-year retirement period, you can use the future value formula. The future value (FV) is calculated by multiplying your annual expenses by (1 + the rate of return)^number of years in retirement. In this case, the rate of return is 6% and the number of years in retirement is 30.
5. To determine how much you will need at retirement considering your current savings, you need to subtract your current savings from the amount calculated in step 4. If you don't have any savings, start with the given amount of $2,000.
6. To calculate how much you need to save per year from now till retirement, assume a 9% annual return. You can use the future value of an ordinary annuity formula, which is FV = P * [(1+r)^n - 1] / r. In this formula, P is the annual savings amount, r is the rate of return (9%), and n is the number of years until retirement.
7. To calculate how much money will be left to pass on to your loved ones if you pass away 10 years earlier than expected, you need to determine the future value of the remaining savings. Use the compound interest formula, FV = PV * (1 + r)^n, where PV is the present value (the remaining savings at the time of your death), r is the rate of return (assuming the same 6% as before), and n is the number of years remaining from your retirement age to when you pass away 10 years earlier. Subtract this future value from the amount calculated in step 4 to find how much will be remaining.