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This is a real world application of the time value of money concepts to understand the power of compounding related to retirement planning. This is a dynamic and powerful exercise using a few basic assumptions: 20 year retirement between the ages of 65-85 with a conservative investment rate of 5%. Set your own financial goals and use this assignment to understand how much you will need to have saved by retirement age to live the lifestyle that you have planned for yourself.
I hope the information you learn here will benefit you now and in your financial planning future – and that you will share it with your friends and family.
Let’s explore how much money YOU need to save for retirement.
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PLEASE watch the video for an explanation / walk through of the assignment (required). This will help you understand the instructions which will save you time and points.
Answer the questions on the 1st page of the worksheet. Much of the assignment is subjective based on your own financial goals, but the math is objective – and you must show your work using your financial calculator for #6 & #7 to demonstrate your understanding of the assignment.
Next, complete #9 of the worksheet using your expected retirement savings by age 30 on the first line and your best estimate of you future earnings by decade for the next four lines.
Input the values from #9 on the worksheet into the Retirement Excel Template (Type directly over my blue numbers. They are there for illustrative purposes). It is important the values from the spreadsheet match the values you input into the Excel template. Also, don’t forget to include the amount of savings you estimate to have accumulated. The worksheet is designed to be flexible to meet your own individual goals.
If the time period set forth isn’t appropriate to your age, feel free to create a fictional scenario or adjust the timeframes as needed. IF you adjust the timeframes, then you also need to make the proper adjustments to the Excel template, as well, because if you change time (n) or rate (r), then you also must change the associated interest factors on the Excel template. Follow up with me if you need help with this.
The spreadsheet will then calculate much of the work for you. But please calculate the very last box at the bottom of the Excel template using your financial calculator. The variables are there for you. This assignment isn’t designed to have you crunch a lot of numbers. You’re doing enough of that type of practice inside of Connect. Rather, this exercise is the practical application of what you have learned about the time value of money from Chapter 9.
Go back and complete the remainder of the worksheet and use the values computed in the Excel template to answer #12 & #13.
Worksheet
Click here for the Retirement Worksheet Download Click here for the Retirement Worksheet
Excel Template
Click here for the Retirement Excel TemplateDownload Click here for the Retirement Excel Template
Please resave your completed worksheet and your completed Excel template. They BOTH must be submitted together.
Tips for Success
Your submission must include both your completed retirement worksheet as well as your Excel template and be sure the numbers between the two documents match accordingly.
The figures from #9 in the worksheet and the blue salary and savings numbers from the template must be consistent with one another. Discrepancies will be a cause for point deductions and will cast confusion on your results/conclusions.
Make sure your answers from #6 & #7 on the worksheet are logical and that your conclusion is sufficient to earn you maximum points.
Proofread carefully for spelling, punctuation, and grammar.
Rubric
Retirement Exercise Rubric (2)
Retirement Exercise Rubric (2)
Criteria Ratings Pts
This criterion is linked to a Learning OutcomeQuestions 1-5
Quality of answers
5 pts
Exemplary
3 pts
Good
2 pts
Meets Expectations
1 pts
Needs Improvement
0 pts
Incomplete/Insufficient
5 pts
This criterion is linked to a Learning OutcomeQuestions 6 & 7
Accuracy of calculations
30 pts
Exemplary
25 pts
Good
20 pts
Meets Expectations
10 pts
Needs Improvement
0 pts
Incomplete/Insufficient
30 pts
This criterion is linked to a Learning OutcomeQuestions 8 & 15
Quality of conclusions
20 pts
Exemplary
17 pts
Good
14 pts
Meets Expectations
10 pts
Needs Improvement
0 pts
Incomplete/Insufficient
20 pts
This criterion is linked to a Learning OutcomeQuestion 9
Accuracy of transferring savings and salary figures from the worksheet into the Excel template.
10 pts
Exemplary
8 pts
Good
6 pts
Meets Expectations
4 pts
Needs Improvement
0 pts
Incomplete/Insufficient
10 pts
This criterion is linked to a Learning OutcomeQuestions 10, 11 & 14
Quality of answers
5 pts
Exemplary
4 pts
Good
3 pts
Meets Expectations
2 pts
Needs Improvement
0 pts
Incomplete/Insufficient
5 pts
This criterion is linked to a Learning OutcomeQuestions 12 & 13
Accuracy of answers
10 pts
Exemplary
8 pts
Good
6 pts
Meets Expectations
4 pts
Needs Improvement
0 pts
Incomplete/Insufficient
10 pts
This criterion is linked to a Learning OutcomeExcel template
Quality of completion including computing the annuity calculation with the financial calculator
20 pts
Exemplary
15 pts
Good
10 pts
Meets Expectations
5 pts
Needs Improvement
0 pts
Incomplete/Insufficient
20 pts
Total Points: 100
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