Copyright: Visual Help Copyright® 1993 Firas Bushnaq


CONTENTS
$401K Retirement Planner

General Program Usage

Input Values

Understanding the $401K Graph

Understanding the Income Graph

Tips

Saving Current Settings

Printing

Registration


PROGRAM USAGE
General Program Usage

      This program is very simple to use.  As you can see the program starts with some default values.  You can change an individual value when it's bar is highlighted blue.  Highlight by clicking on the value you wish to change.  You can also use the TAB or Enter buttons to get to the desired value.  Once you have changed a value, you must switch to a different value with the click, Tab, or Enter method to update the graph and spreadsheet values.

     You can view the results of the program in the three different ways: the Spreadsheet, $401K Graph, and the Income Graph.  Simply click on the Graph or Spreadsheet buttons to switch views.

     For more help on individual values, click on the Help button while the value is highlighted.  Help will then pop up about that topic.

     There are tips and examples on how to use this program within each Input Value section in help.


Input Values

Current Age

Retirement Age

Current Annual Salary

Current 401K Balance

Estimated Annual Raise

Retirement Income Goal

Annual 401K Contribution

Company Matching Funds

Annual Return on 401K

Annual Return During Retirement

Estimated Annual Inflation


Current Age

      Enter your current age.  This program will only accept values between 20 and 65.  This field will only allow numbers. Do not enter any letters or symbols.

Note

This value will remain locked unless your register the product.  See Registration for help.

Tip

This may be obvious, but the earlier you start investing the better.  To demonstrate how dramatic this can be, try the following example:

       Suppose you started at age 20 and saved $2000 per year for 10 years and stopped (@ age 30).  Lets see how much your portfolio would be worth at age 65. Input the following:

Current Age: 20
Current Annual Salary: $50,000
Current 401K Balance: $0
Annual 401K Contribution: 4%
Annual Return on 401K: 10%
Retirement Age: 65
Estimated Annual Raise: 0%
The other values can be anything.

      Look at the 401K balance at age 30 ( $35,062).  Input this value in Current 401K Balance.  Change current age to 30.  Change your Annual 401K Contribution to 0%.  Look at the balance at age 65 ($985,000).  Remember this value.

      Now suppose at Age 30 you start saving $2000 per year until you retire at age 65. Keep your current age at 30.  Change your Annual 401K contribution back to 4%.   Change Curretnt 401K balance to $0.  Look at the 401K balance at age 65 ($596,000).

      In the first part you saved a total of $18,000: at age 65 you have $985,000.
      In the second part you saved a total of $72,000: at age 65 you have $596,000.

THIS SHOCKED ME TOO!


Retirement Age

     Enter the age at which you are planning to retire.  This value must be greater than the Current Age you enter and must be less than 75.  Enter only numbers.  Do not enter any letters or symbols.

Tip

      Try shifting this value by a year or two.  You may be suprised to see how much this affects your retirement income.  At your retirement age, the return you enter for after retirement takes effect.


Current Annual Salary

Enter your Current Annual Salary. This value must be between $10,000 and $3,000,000.  Enter only numbers.  Do not enter any symbols or letters.

Tip

This program relies heavily on percentages.  If you wish to see how much you will save using dollar amounts, for example $2,000 per year.  Make your income an even $100,000 and use 2% as your 401K contribution.


Current 401K Balance

Enter the present value of your savings, or your 401K portfolio.  This program will accept numbers from $0 to $1,000,000.  Do not enter any letters or symbols.

Tip

Again, this number affects your portfolio significantly.  Even though you do not have much control over how much you have saved so far (i.e. water under the bridge at this point), play with this number to see how important it is to start early.  See the tip for Current Age.


Estimated Annual Raise

Enter an estimated annual raise.  This Program will accept numbers between 0 and 25 percent.  Enter only numbers.  Do not enter any numbers or symbols.  Enter whole numbers. For example, enter 5.0 if you expect 5.0%.

Tip

Since this is a speculative amount, try to be conservative.  To assume a cost of living increase in your salary, make this field equal to the Estimated Annual Inflation field.


Retirement Income Goal

Enter your Goal in TODAY'S dollars.  This program will accept a goal between $10,000 and $3,000,000.  Enter only numbers.  Do not enter letters or symbols.

Enter in TODAY'S dollars.  This program will adjust your goal for inflation.  You can see this effect on the spreadsheet or the Income graph.

Tip

A good rule of thumb is to enter an income you would feel comfortable living on today, and take 70% of that number.


Annual 401K Contribution

Enter the percent of your income you would like to contribute to your 401K plan each year.  This program will accept values between 0 and 25 percent.  Do not enter any symbols or letters.  Enter whole numbers.  For example, if you wish to contribute 5.3%, then enter 5.3.

Tip

Out of all the values you enter, this is the field you have the most control over.  You cannot control inflation, your return, or in most cases even your salary.  So, if you need to adjust your numbers to meet your goals, this is the field you should be changing.


Company Matching Funds

Enter the percent of your salary your company will contribute to your 401K plan.  Enter only numbers.  Do not enter any letters or symbols.  If you wish to enter 4.2%, then enter 4.2.

Tip

Make sure this value is a percentage of your income and not a percentage of your contribution.  Also, if you are unsure of how much money your company will match, consult with your personnel or human resources representative.  They should be happy to help you out.


Annual Return on 401K

Enter the estimated return you expect from your investments.  This value must be between 0 and 25.  Do not enter any symbols or letters.  If you wish to enter 8.6%, then enter 8.6.

Note

This value is locked at 6% unless you register this product.

Tip

Play with this value.  This value has an incredible effect on your portfolio,  even a half of a percent can make a large difference.

Tip

If you wish to see your account grow in just raw dollars over time, then enter zero for this value.


Annual Return During Retirement

Enter an estimated return on your investments during your retirement years.   This value must be between 0 and 25.  Enter only numbers.  Do not enter any letters or symbols.  If you wish to enter 4.2%, then enter 4.2.

Tip

Since your investments may be your only source of income during your retirement, you might want to consider being more conservative with your investments.  Therefore, try entering a conservative value for this return.  In most cases, the return will be less than your return prior to retirement.

NOTE: We are not advocating any particular investment strategy.


Estimated Annual Inflation

Enter a value for Annual Inflation.  This value must be between 0 and 25 percent.  Enter only numbers.  Do not enter any symbols or letters.  If you wish to enter 4.2%, then enter 4.2.

Tip

Historical estimates for inflation typically range between 3 to 6 percent a year.

Tip

If you wish to see all numbers in todays dollars, then enter zero for this value.  To be conservative, you should also enter zero for your Raise.   Also, you should decrease your Annual Return on 401K by the Inflation rate you estimate to be true. You will see that your retirement Goal will remain constant over time.


401K GRAPH
Understanding the $401K Graph

This is your 401K balance.  The blue area is before your retirement age and the green area is after.  As you move the mouse pointer over the graph area the vertical position line will attach to your pointer.  Notice the the Age and Balance values change according to the position of the vertical line.  Basically, it's an automatic graph reader.

     As you make value changes, do not be fooled.  The scale changes to fit the data on the graph.


Understanding the Income Graph

       This graph represents the Income in your retirement years.  The light blue area is your income goal, the green area is income from your investments, and the red area is the difference between the two values.  As you move the mouse pointer into the graph area, the vertical position line will attach to the pointer.  This becomes an automatic graph reader. Notice how the values in the boxes change as you move the bar.

       The value of your investment income may be more than your goal.  This will not show up on the graph.  This program assumes that you will only take your income goal as income and re-invest the difference.  If there is a bar with red and green areas, this means that you needed to use some of your savings to supplement your investment income.  This means your 401K balance is decreasing.  An all red bar means you are out of money for retirement.

       Note that the only way to guarantee that you will be able to maintain your standard of living in retirement is if you are able to live solely off of the interest from your savings, plus any other payments you might be receiving (i.e. social security, pensions, etc.).  Once you start dipping into your principle, then you are guaranteeing that your balance will become zero within a finite number of years.


Tips

1	Look at the Input Value sections for more tips.

2	If you want to see the raw dollars you will be saving, then enter zero for your Annual Return on 401K.

3	If you want to see every value in today's dollars, then enter zero for both Inflation and your Raise, then decrease your Return on your 401K by your estimated Inflation rate.


Saving

When you exit the program, you will be automatically prompted to save your present values.  If you choose YES the next time you start, these values will automatically be loaded into the program.


Printing

Choose Print under the File in the menu bar.  You will then be prompted to enter the range of ages you wish to print.  This will print the range of ages you choose, as well as all the input values.  This program will only print the spreadsheet values (sorry, it won't print the graphs at this time).


Registration

     As you may have noticed "Current Age" and "Annual Return on 401K" are not enabled.  This is a demonstration program which shows you all of the features of the program.  However, to unlock the two above fields you need to Register with SoftLock Services.  To do this, click on Register on the menu bar and follow the directions.


TOPIC1
Title


Income Graph