Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: caseyzee on April 13, 2015, 10:34:57 AM
Title: Could someone help me with the Maths? Or possibly just the Excel?
Post by: caseyzee on April 13, 2015, 10:34:57 AM
Hi. MDM posted this formula on another thread to estimate time to FI. I've tried plugging my numbers into excel but it spits out a -.87. Clearly, I am doing something wrong, but I'm not sure what. Could someone help me please?
The formula was....Time in years to FI = Ln((S + i*E/WR) / (S + i*A)) / Ln (1+i)
Where A = Asset amount currently invested in funds to be drawn in retirement (525k for me) E = Total annual expenses in retirement, including taxes (estimating 40k for me) i = Real return on invested retirement funds (Which I'm assuming is return less inflation? I was assuming 3%) S = Annual amount invested in funds to draw on in retirement (Which I assume is my contributions to retirement funds, = 21k for me now) WR = Withdrawal rate = 4% for me
TIA. -Casey
Title: Re: Could someone help me with the Maths? Or possibly just the Excel?
Post by: Valhalla on April 13, 2015, 10:40:03 AM
post your excel formula so we can see the error.
Title: Re: Could someone help me with the Maths? Or possibly just the Excel?
Post by: MDM on April 13, 2015, 10:43:46 AM
Try copying the lines below and pasting into cell A1 of a blank spreadsheet.
With these numbers I get 26.3 for Time.
S
10
i
0.03
E
20
WR
0.04
A
50
Time
=LN((B1+B2*B3/B4)/(B1+B2*B5))/LN(1+B2)
Title: Re: Could someone help me with the Maths? Or possibly just the Excel?
Post by: caseyzee on April 13, 2015, 10:54:03 AM
Oh, I got 26.27 for that too! I'm not sure what went wrong the 27 different times I tried it.
Thank you!
Title: Re: Could someone help me with the Maths? Or possibly just the Excel?
Post by: MDM on April 13, 2015, 11:09:04 AM
You're welcome - good to see that it is working the same way for you.
Title: Re: Could someone help me with the Maths? Or possibly just the Excel?
Post by: ShoulderThingThatGoesUp on April 13, 2015, 11:29:32 AM
Huh. I'd never actually done the math. On track to be FI around 40. Will just be working to make sure my kids are set after 2030. Cool.