Retirement Spreadsheet

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Hi,


Does anyone here use a retirement spread-sheet to calculate how much money they would need to retire at x age?


I would like something that contains a formula which takes into account inflation.


Any suggestions would be appreciated.


Thanks

Comments

  • AnotherJoe
    AnotherJoe Posts: 19,622 Forumite
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    edited 30 December 2016 at 11:57AM
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    I think you are best off ignoring inflation, and simply taking any planned investment growth as being net of inflation. For example, if you think your investments will grow at a measured 8% but inflation will be 3%, put your growth as 5%. That way all numbers are always in today's money, so that when you are looking at an income of say £20k a year in 20 years time you dont then need to work back on that to see what that's worth in today's money.
    So any cash you have will likely have a negative investment rate as well.

    Having said all that, I suggest you look at the retireeasy website which does everything a spreadsheet will do and a lot lot more. They have started charging for it, something like £2 a month, even if you used it for a single month to get some numbers done, the £2 would be well worth multiple hours of spread sheet work saved. And no errors, unlike most spreadsheets.

    (I think they also have a free version but that is without the pretty graphs which are well worth it. )

    Ps there is also firecalc which lets you model historical stock market performance against a lump sum, e.g. Say you had £100k and you drew down on that £4K every year, then over the past 120 years of stock market performance, what percentage of the time would the money have run out after 20,30,40 years. You can play with withdrawal rates and other figures.
  • taylornj
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    Probably better if you looked under the pensions, annuities and retirement planning forum first, and moved the question there if a search doesn't turn up anything already in the forum.
  • MarcoM
    MarcoM Posts: 799 Forumite
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    many thanks for the replies

    I always thought that to plan what pot needs to live inflation would be a major factor. what do the FA browsing these forums think?
  • AnotherJoe
    AnotherJoe Posts: 19,622 Forumite
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    edited 30 December 2016 at 12:58PM
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    Absolutely inflation is a major factor. When I said ignoring it, I didn't choose my words very carefull. I did in the second part of that sentence, say you should factur it in by subtracting it from growth, to get a net figure. Anyway that's what I'm explaining better (hopefully) now.

    Say you have a £100k now. You can say it increases at 8% each year for 20 years then work out what it's worth in today's money at 3% backtracked.
    Or you can just say it increases at 5% a year and then it's automatically in today's money. Less complex less calculation less room for error.

    In any case, retireeasy let's you put in figures for growth, inflation and much more more and then shows it to you in today's money.
  • MarcoM
    MarcoM Posts: 799 Forumite
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    thanks.

    i have looked at the website you suggested.
    it is 3 quid a month but I was wondering if I can cancel easily after using it once...or am I tied for a whole year?
  • dunstonh
    dunstonh Posts: 116,658 Forumite
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    I always thought that to plan what pot needs to live inflation would be a major factor. what do the FA browsing these forums think?

    Failure to include inflation is a major cause of people not getting what they thought they would in retirement.

    e.g. starting £30pm in 1988 was a good contribution level for many people. However, some of those are still paying that £30pm today having failed to increase it. So, whilst £30 was great in 1988. It is dire in 2016. When they get to retirement, they will not be happy and will no doubt blame the pension. Then appear on some ITV "news" show dumbed down for the masses on how bad pensions are.....
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • AnotherJoe
    AnotherJoe Posts: 19,622 Forumite
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    MarcoM wrote: »
    thanks.

    i have looked at the website you suggested.
    it is 3 quid a month but I was wondering if I can cancel easily after using it once...or am I tied for a whole year?

    Sorry no idea I started on it when it was free. I'd have thought since it was per month you could cancel otherwise it would be £36 a year but you'll have to look at the ts&cs.
  • chile_paul
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    You might want to have a look at a new US site called trackfi.com

    I've only just started using it, set up by a contributor on the MMM forum.

    Depending on your requirements it may or may not be of use to you.
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