Author Topic: 401k Contributions / Calculating Projected Account Growth  (Read 1346 times)

TheInsuranceMan

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401k Contributions / Calculating Projected Account Growth
« on: August 03, 2015, 01:29:25 PM »
So, for the life of me I cannot wrap my head around calculating potential growth on my 401k right now.  I've done scenarios based off my current income, current 401k allotment, and current employee contributions out to age 45, 50, and 55, starting at $0 (which thankfully isn't the case).  This chart, based on my income, was 401k contribution percentages from 6% - 30%, what what they'd total at the ages I've listed above.  However, that is just contributed dollars based on 0% interest, just what myself and my employers dollars would total up to.  I'd like to be able to itemize it out at 5% - 10% projected returns to those ages.

Does that make sense?  Can anyone help?  I'm doing it in excel right now, as I was playing with how much increasing my contribution would change my take home pay, and then it's just spiraled from there..

dandarc

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Re: 401k Contributions / Calculating Projected Account Growth
« Reply #1 on: August 03, 2015, 01:36:48 PM »
On the vertical, put "age".  On the horizontal put "Investment Return".  However many percents you want to try.

In the middle, put your future value computation (use the FV function for simplicity).  The inputs should be the same for everything except for number of periods (based on age) and rate (taken from the Investment Return fields).

I personally use real-returns and ignore inflation.  These are going to be approximate projections anyway.  I usually wind up using 5% as a real return.

dandarc

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Re: 401k Contributions / Calculating Projected Account Growth
« Reply #2 on: August 03, 2015, 01:41:28 PM »
Oh - and you have a different grid for each contribution percentage.

Gotta handle the 4th dimension somehow.

dandarc

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Re: 401k Contributions / Calculating Projected Account Growth
« Reply #3 on: August 03, 2015, 01:44:12 PM »
You could also enter your data in a list with 4 columns:

Age - Contribution Percentage - Investment Return - Future Value

and then do a pivot table.

TheInsuranceMan

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Re: 401k Contributions / Calculating Projected Account Growth
« Reply #4 on: August 03, 2015, 01:48:30 PM »
Good info - I haven't taken into account yearly wage increases, assuming something minimal. 
It looks like this right now
                                                                                                                                                                                                                  Age
401k % | Contribution | Employer Contribution | Total | Yearly Contribution | Taxes/Insurance | Paycheck                                            45               50                55
6%
7%
8%
9%
10%

and then it is graphed out from there, using my monthly base pay.
Since this was used to calculate my paycheck changes, I think I need to do the interest calculations on a different sheet in excel for ease of use...

TheInsuranceMan

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Re: 401k Contributions / Calculating Projected Account Growth
« Reply #5 on: August 03, 2015, 01:51:42 PM »
I found this one...http://www.vertex42.com/Files/download2/gdrive.php?file=401k-calculator

If I use a starting salary of 38k, current 401k balance at 34k, and my age at 27, a 2% salary increase per year, and 3% employer contribution max - I'd have  $ 432,933  at retirement, which seems crappy.