This program allows you to estimate what you can withdrawl from your
retirement funds on a yearly basis based on today's assumptions. The
calculated first years retirement value is based in today's dollars and will be increased over your
working years by the replacement rate you
choose. If you think your wages will increase 3.5% per year,use 3.5%. This
will increase this value by 3.5% untill you retire.
Adjusting benefits by inflation will only allow you to maintain a living standard based on the year
you begin indexing from. Therefore, I suggst using your wage growth as the replacement rate.
You do not want to start retirement with a buying power which is based on thirty years ago. This
will at least allow you to start retirement with the same buying power for each dollar your wages
provided for you in the last year you worked. To maintain your buying power equal to that of the
economy, you need to use the GDP number or US average Wage Growth value.
The idea is to save the same percentage of your wages each year. If you see
your wages increasing at 3.5% a year,
simply increase your rate of savings by 3.5%
The program allows you to increase your first years retirement amount by the
replacement rate you have chosen for
retirement. When you reach your year you think you might pass on, you will
leave exactly zero in the bank so to speak.
This is a mathematically correct formula.
There are two tables showing the yearly cash flows for both Saving and retirement.