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+--- Thread: Retirement Math (/showthread.php?tid=101159)
Retirement Math - Firemon - 10-17-2015
"I'm trying to talk myself out of a trip this Christmas. Felt like if I knew how many similar trips this would allow me to take at retirement it might help."
https://www.reddit.com/r/personalfinance/comments/3p0954/if_i_forgo_a_3000_vacation_at_age_30_and_invest/
RE: Retirement Math - Firemon - 10-17-2015
This can be answered using future value function in Excel. For rate of growth choose a number that takes inflation into account. If 5% real growth (i.e. after inflation) for 30 years, then the $3000 ends up worth about $12965, so about "4 vacations" in today's dollars.
=FV(0.05, 30, 0, -3000, 0)
The arguments are growth per year, number of years, yearly contribution, starting value, and then 0 or 1 depending on whether contributions are made at ends or starts of years. In this case I used 0 for contributions and -3000 for the present value, because you aren't saying you will forgo a 3000 vacation every year.
The use of a negative number for present value (starting amount) is a convention that will make future value read as a positive number.
If you decided to save 3000 every year, you'd have over $209,000 at age 60, which would be about 30 $7000 vacations.
RE: Retirement Math - captaind on Zion Hill - 10-17-2015
$100 placed at 7% interest compounded quarterly for 200 years will increase to more ‘than $100,000,000--by which time it will be worth nothing. - Lazarus Long
RE: Retirement Math - rastagirl777 - 10-17-2015
Live for today - tommorow is not guaranteed.
RE: Retirement Math - Tim - 10-18-2015
MMEspecially not 7%. If I could guarantee that rate I might actually get to plan a retirement date lol.