Document Type

Closed Project

Publication Date

Fall 2006

Instructor

Dinesh Shah

Course Title

Engineering Economics

Course Number

EMGT 535/635

Subjects

Engineering economy, Retirement -- Planning, Saving and investment -- Analysis

Abstract

Retirement planning is a relatively new phenomenon. Life longevity and an earlier retirement age trend have necessitated a more rigorous approach to planning. There are many saving programs that exist today that encourage retirement savings. They include IRA’s, 401k’s, Pension and Profit Sharing plans. Although Social Security is still solvent, it future is indeterminable. Most Americans will have to supplement their savings plan income with funds from other sources, including second jobs, stock market investments or real estate investments.

Although there is no one template for everyone, one common method of retirement plan development is the “worksheet”. Typically software driven, the worksheet allows one to enter some known data, make reasonable assumptions about unknowns, and then calculates a future value based on a specified savings rate. It is this time value of money calculation that serves as a basis determining an action plan that will meet a particular retirement goal.

It is difficult to determine how much money needs to be saved each month to generate the required income. It is the worksheet that is used as the tool to facilitate this calculation. Since most people can’t handle the many calculations needed to plan effectively for retirement the worksheet performs the mathematical calculations for them. We developed a worksheet using Excel that assists individuals or families in retirement planning. Retirement planning parameters were developed with research on different investment vehicles. The research included stocks, futures, bonds, mutual funds, exchange-traded funds, annuities and any other appropriate investment vehicles the major brokerages of Wall Street provide. The worksheet considers risk factors, time horizons, retirement age, savings rates, income desired at retirement, taxes, inflation and calculates the amount of money that will be needed to generate a desired monthly income at retirement. The output of the worksheet is a bar graph and a cash flow from present to end.

Rights

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Comments

This project is only available to students, staff, and faculty of Portland State University

Persistent Identifier

http://archives.pdx.edu/ds/psu/23316

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