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Figuring Out How Much You Need To Save Per Year

26 August 2006

The other day I did a brief analysis of how much a person at age 24 would need to save per year to get a nice nest egg come retirement. I mentioned that I did it using Excel. Well, if you’ve got Microsoft Excel yourself, I’ve made an easy to use spreadsheet that you can download here that will let you play around with the numbers like I did, figuring out how much you need to save every year for retirement. I assume a conservative 9% return on stocks – all you have to do is fill in the numbers in the yellow boxes to fit your personal financial situation. Then just look over to the year that fits when you’re planning on retiring, and it will show you roughly how much you should have saved up by then. It’s a valuable exercise, especially for people who are young and think they’re not going to have much money at retirement if they’re only putting away a few thousand dollars a year. Try different amounts, and you’ll see how compounding really works. You don’t have to know anything about Excel to use it – just replace the sample numbers with yours.
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