Time value of money concepts are one of the key building blocks to understanding corporate financial management. TVOM also has many applications to personal finance. One is retirement planning. Use the Excel template in the schedule for this week.

Initial Post

Your initial post may address the following questions:

1. Expected length of retirement period (life expectancy in years)
2. Desired monthly retirement during your retirement
3. What rate of return might you earn on your retirement funds?
4. How many years do you plan to work?
5. What rate of return do you expect to earn on your investments toward your retirement fund?
6. Will the combination of your and employer contributions allow you to achieve your target retirement fund?

D E F An Application of Time Value of Money: Retirement Planning This example does not allow for growth in your annual salary. It also does not account for uncertainty in return assumptions. Feel free to modify. Cells in yellow highlight require User Input. Do NOT touch the other cells! Retirement Period Life Expectancy (years) Life Expectancy (months) Desired Retirement Income monthly Retirement Fund Rate of Return 0.00% annually 0.00% monthly PVIFA #DIV/0! Target Retirement Fund #DIV/O! 0 0 $ 0 Accumulation Period Working Life (years) Working Life (months) Accumulaton Period Rate of Return 0 0% annually 0.00% monthly FVIFA #DIV/0! #DIV/O! Required Monthly Retirement Investment per month $ 100,000 annual salary With Employer 401(k) Plan--for example, 7% monthly from your monthly salary Employer contribution $ $ 0% 0% $ #DIV/0! Additional Monthly Investment to Achieve Desired Retirement Fund #DIV/O! per month D E F An Application of Time Value of Money: Retirement Planning This example does not allow for growth in your annual salary. It also does not account for uncertainty in return assumptions. Feel free to modify. Cells in yellow highlight require User Input. Do NOT touch the other cells! Retirement Period Life Expectancy (years) Life Expectancy (months) Desired Retirement Income monthly Retirement Fund Rate of Return 0.00% annually 0.00% monthly PVIFA #DIV/0! Target Retirement Fund #DIV/O! 0 0 $ 0 Accumulation Period Working Life (years) Working Life (months) Accumulaton Period Rate of Return 0 0% annually 0.00% monthly FVIFA #DIV/0! #DIV/O! Required Monthly Retirement Investment per month $ 100,000 annual salary With Employer 401(k) Plan--for example, 7% monthly from your monthly salary Employer contribution $ $ 0% 0% $ #DIV/0! Additional Monthly Investment to Achieve Desired Retirement Fund #DIV/O! per month