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401K calculator for planning

Old 01-11-2021, 03:58 PM
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Default 401K calculator for planning

I've been trying to do some math and looking for a 401k calculator to help me with my projections.

I have a current 401K that I contribute 8% into. That 8% is matched 50% which basically means 12% of my salary goes into a 401k. Current plan is to retire at 60. When I turn 55, I will get an additional retirement pension that I will use to contribute to my 401k until I hit 60.

Is there any calculator out there that somebody can point me to that will help me calculate the potential?

To use round numbers, for example, let's say I make $100,000. When I turn 55, I will get an additional $25,000/ year to invest until I am 60. When I am 55 I will be putting $16,610 in based upon an average salary increase of 3% per year. I will then add an additional $25,000 per year into the 401k for the next 5 years.

Again, I want to be able to calculate my potential earnings during that time.
Old 01-11-2021, 04:07 PM
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Do you have excel on your computer? It’s a very basic computation.
Old 01-11-2021, 04:08 PM
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Just run two separate annuity formulas and add them together. The pension isn't going to really move the needle much beyond the principal.
Old 01-11-2021, 04:14 PM
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This works great



Old 01-11-2021, 04:17 PM
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https://www.bankrate.com/retirement/...nt-calculator/
Old 01-11-2021, 04:41 PM
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^^^^ This is nice. That said, I'm not sure you can do what you think at age 55. As of now, anyway, the IRS maximum contribution to your 401k plan is $26000 ($19.5k + $6.5k catchup over age 50). Which isn't to say you can't and shouldn't invest the remainder, of course.
Old 01-11-2021, 05:01 PM
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Originally Posted by feralcat View Post
^^^^ This is nice. That said, I'm not sure you can do what you think at age 55. As of now, anyway, the IRS maximum contribution to your 401k plan is $26000 ($19.5k + $6.5k catchup over age 50). Which isn't to say you can't and shouldn't invest the remainder, of course.
This.

But, you are 44 now contributing 12k? Will you continue to get the 12% from ages 55-60?

If so, the NPV at 5% of your future contributions is ~$210k (nominally $367k) and the FV is $458k, assuming a $0 balance today.
Old 01-11-2021, 05:07 PM
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Excel
Id assume real earning of just a couple % above inflation.

And you get more conservative the closer you get to needing it.


Old 01-11-2021, 05:09 PM
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Just running some simple math - salary and investment

$100,000.00 $12,000.00
$103,000.00 $12,360.00
$106,090.00 $12,730.80
$109,272.70 $13,112.72
$112,550.88 $13,506.11
$115,927.41 $13,911.29
$119,405.23 $14,328.63
$122,987.39 $14,758.49
$126,677.01 $15,201.24
$130,477.32 $15,657.28
$134,391.64 $16,127.00
$138,423.39 $16,610.81
$142,576.09 $17,109.13
$146,853.37 $17,622.40
$151,258.97 $18,151.08
$155,796.74 $18,695.61
$160,470.64 $19,256.48
Old 01-11-2021, 05:35 PM
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You can't do exactly what you are talking about but just because money isn't in the same account doesn't mean you don't have it.

I can't attach an excel file here but if you are 45 and make $100K now, continue the 12% contributions, 3% raises and have an 8% rate of return on average in 2040 your 401k will be worth $685K assuming you start with $0 today. Now before you get all giddy - your salary would be $175K with those 3% raises if you keep working to 64 and all of that neglects the 25K/yr. You can complicate the math a lot but really if you calculate based on annual basis it is really simple and your minimal variants in how you compound are less than noise of uncertainty of the future.

The 5yrs of the $25k are nice but really the power of compounding doesn't really show up. That $125K over 5yrs is worth $160K at the end. If you stop everything at 60 you will only have $597K to work with.

I think it is safe to say anybody under 50 needs to be thinking beyond $2M to fund retirement if they are thinking they are bailing out of workforce before 67. This can change if you have other income streams after retirement (royalties, rental income, etc).
Old 01-11-2021, 05:41 PM
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Originally Posted by kwb74 View Post
The 5yrs of the $25k are nice but really the power of compounding doesn't really show up. That $125K over 5yrs is worth $160K at the end. If you stop everything at 60 you will only have $597K to work with.
This is the break over that I am wondering about. I have a good amount in a 401K already thankfully. I'm just trying to figure out how that additional $125K will compound during that 5 year period.
Old 01-11-2021, 05:45 PM
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Not sure how this formats but worth a try:


Old 01-11-2021, 05:48 PM
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It will all depend on what assumptions you make for returns.

I didn't worry about assumptions and just saved the max that the various plans allowed.

When I realized that I would take home as much being retired as I was by working, I told my boss I was done.
Old 01-11-2021, 07:28 PM
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Originally Posted by Barefoot View Post
It will all depend on what assumptions you make for returns.

Old 01-11-2021, 08:06 PM
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You didn’t factor in the presidential election....
Old 01-11-2021, 08:07 PM
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If future earnings are only 3% growth, basically inflation....leave that out...just figure based on after inflation return and pay... Every year is the same then ...and what you see for result, is in today's $.

Ie....how much $ do you need per year in 23 yrs....quick?
How much would you want today.....you already know the answer to that....in today's $.
Leaving inflation out, gives you meaningful #s you can understand....ie..are you saving enough. Same for doing depletion calcs for next 30 yrs after retire...you can see how much you can afford to take out per year....and will it be enough.

Old 01-12-2021, 05:23 AM
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Unless you want to really stretch the math like all government pension program actuaries do when they use 7% or 8% annual growth in their projections irrespective of inflation, you would be better off using 3.5% over the inflation rate for your growth calculations (which is the historical blended rate most pensions earn over the long term). In today's environment (approx 1.75% inflation), that would be a 5.25% rate.
Old 01-12-2021, 05:41 AM
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I don't see how to answer the questions without knowing your age and present value of 401K. That said word math problems were not my strong point in school.
Old 01-12-2021, 06:42 AM
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I'm look for how to calculate it, which is why I used round numbers and a generic age but I am 44.

For giggles, let's add another layer to this. Not accounting for inflation but using a 3% salary increase per year... Using the same elements - age 44 with plans to retire at 60.

Job A pays $150K with only a 401k but you have $200,000 in the 401k. Plan on 8% yearly growth in the 401K with the same 12% contribution from above. 16 years to continue to fund the 401k.
Job B pays $100K but is a government pension that will pay you 75% of your higher 5 year average when you retire. You still have $200,000 in the 401k but you cannot add any more contributions.

Basic math shows in salary alone, Job A would pay a little more than 1 million dollars more over this time frame but you have to account for that fact that your actual buying potential is reduced by 12% due to contributions. In retirement though, Job B would guaranteed $113,543 per year where as your 401K balance would be $1.14 million.

Using an online 401k calculator, you could withdraw $113,543 per year (same as the pension) for 15 years assuming 8% return per year. That puts you at age 75.





Old 01-12-2021, 06:58 AM
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It may have been said already but is the interest compounded daily or annual? I know every day interest is gained or lost. So I am slightly confused. Thanks

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