Retirement planning is a common application of time value of money analysis. In this exercise you need to build a model to calculate required retirement savings from a set of assumptions. Specifically, you must build a spreadsheet to calculate estimates of:

• Annual income needed in retirement. (based on a % of current salary)

• Total Savings you need to accumulate by the day you retire.

• Estimated annual contributions required before retirement needed to meet your retirement goal.

These calculations will be based on the following assumptions. Your model must be constructed so new values will be calculated when any of the assumptions are changed.

Calculate the three items above for the following two scenarios of assumptions plus one scenario of your own:

(note the assumptions and solutions for your scenario in the third column)

A B D E 1 2 3 4 0% 5 6 Name: Template for Excel Exercise #1 - Retirement Projection Scenario 1 Scenario 2 Your Scenario Assumptions Fair Market Interest Rate = 5% 5% Current Age = 23 35 Projected Retirement Age = 65 65 Projected Age of Death = 95 95 Current Annual Salary = $ 60,000.00 $ 60,000.00 $ % of Salary Needed in Retirement = 80% 80% Current Retirement Savings = $ $ 20,000.00 $ Estimated Annual Income Needed In Retirement 7 8 9 0% 0% 10 11 12 13 14 Caculated Total Savings Needed at Retirment = 15 16 Required Annual Savings Before Retirement =