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With the recent "unpleasantness" in the stock market, many nervous youngsters are asking, "What if I don't get a 10% return? Will I ever retire?" To help answer that question, Retire Early used the stock market database compiled by Yale University Prof. Robert Shiller to create a spreadsheet that will tell you how much your money will grow under the For example, the worst 20-Year compounded annual return for the S&P500 index is 3.30% per annum. Contributing $2,000 to an IRA on Jan 1st of each year for 20 years would return $57,240 at the end of the 20-Year period. Unfortunately, even in the worst of times, you won't get exactly a 3.30% return each year. The table below shows the distribution of the actual terminal values for 110 20-Year holding periods from 1871 to 2000. The minimum value, $53,901, is a bit below the $57,240 you get with a constant 3.30% average annual return.
The Millennium Edition -- Safe Contribution Calculator can be downloaded to your hard drive. You need Excel 95 or a later version of the program to use the spreadsheet. Download Safe Contribution Calculator
The You may want to print this page so that you can refer to these instructions while you work with the retirement planning spreadsheet. |

**Figure 1.**

----- Version 1.1RETIRE EARLY | ||

Safe Contribtution Calculator ------ Revised: October 28, 2000 | ||

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Initial Account Balance | $50,000 | . |

Accumulation Period | 1 | 1=10Yrs, 2=20Yrs, 3=30Yrs, 4=40Yrs, 5=50Yrs, 6=60Yrs |

Stock Allocation | 100% | Balance of Portfolio in Fixed Income, Total = 100% |

Fixed Income Series | 4 | 1=4 to 6 month Commercial Paper Rate, 2=5-yr US Treas. , 3= 30-yr US Treas., 4=TIPS |

. | . | (Note: 5-yr and 30-yr US Treas. Data series are incomplete) |

TIPS Coupon | 3.92% | (Assumed Yield on the 30-Year TIPS) |

Initial Annual Contribution | $2,000 | per annum |

Annual Contrib. Increase | 0.00% | per annum |

Investment Expenses | 0.20% | Percent of assets per annum |

Rebalance Portfolio? | 1 | Yes=1, No=2 |

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## Input parameters.
For simplicity, assume the Smith's have the entire portfolio invested in an S&P500 index fund and that they will not increase their annual contribution beyond the initial level.
To find the "90% sure" contribution level, vary the "Initial Annual Contribution" until the Using the same trial and error procedure to find the "75% sure" level reveals that an initial contribution of $20,050 per year results in a 25th percentile Terminal Value of $2,000,563. The Table below summarizes the results for the Smith's.
The Hope you're able to |

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Copyright © 2000 John P. Greaney, All rights reserved.