10-17-2015, 06:50 AM
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.
=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.