Yesterday, I wrote about my first lesson in personal finance where I saw what the effect of savings rate had on retirement outcomes. I focused on the binary result of your net worth growing or shrinking after retirement.
I made a simple spreadsheet if you want to play with this yourself.
And here’s an Excel version.
To use it
- Put your age in A2
- Put your current net worth in I2 and K2
- Put your current salary in I4 and K4
I would leave market return, inflation, etc alone and concentrate on seeing the effect of different savings rates. You can see the actual saving amounts in Columns D and F.
Of course, you should not take this as financial advice or even assume these spreadsheets are correct — check the math (let me know if you see an issue).
They are not meant to be accurate models, they are a very simple way of looking at it.
Remember, you can’t really control a lot of the variables on this spreadsheet except saving rate, which you have a lot of control over.
I’ll soon talk about income, which is the other big variable you can control. In this spreadsheet, I have assumed that you get raises slightly more than inflation.