1. Personal Finance Project – Day 4
Activity 6: Estimating Your Retirement Needs
In the previous activities, you developed a picture of your lifetime income and
expenditures. By now, you're probably aware how important it is to begin saving for
your retirement. How much will you need to save? When should you begin saving?
Go to http://money.msn.com/retirement/retirement-calculator.aspx Fill in your
current age and estimated life expectancy. Are you planning on saving enough to pay for
your retirement? Try varying levels of annual contributions, retirement age, and your
current age and record the resulting portfolio values. Be truthful about how much you
have in savings today.
ANSWER – provide specific numbers:
1. What happens to your IRA portfolio value when you increase your annual
contribution to a retirement fund?
2. What happens when you change your current age to indicate that you are older and
are starting to save later?
3. What happens when you increase your retirement age?
Enter the value of your retirement portfolio on your timeline at the estimated time of
retirement.
This exercise will help you put your life into perspective and see how your lifetime
budget might be expected to play out. Think about and respond to the following
questions: 1. When will you be able to start to save for retirement? 2. How will you pay
for your children’s college education or the new car you want so badly? Hopefully, you
will see that you have to make choices over their entire lifetime and not just today.
Remember to save early and save often! 3. How do you fit all of your life on the timeline
and make it balance?