Develop a spreadsheet model that could be used to assist a user with retirement planning. Your model should include the following input parameters:
User’s Current Age = 40 years
User’s Current Total Retirement Savings = $250,000
Annual Rate of Return on Retirement Savings = 5%
User’s Current Annual Salary = $145,000
Expected Annual Percentage Increase in Salary = 3%
User’s Percentage of Annual Salary Contributed to Retirement = 10%
Income Tax Rate Pre-Retirement = 28%
User’s Expected Age of Retirement = 65
User’s Expected Annual Expenses after Retirement (current dollars) = $55,000
Rate of Return on Retirement Savings After Retirement = 3%
Income Tax Rate Post-Retirement = 15%
Assume that the user’s employer contributes 6% of the user’s salary to his/her retirement fund and that the user’s annual contributions to his/her retirement are before taxes (tax free) up to a contribution of $16,000.
Your spreadsheet model should provide the accumulated savings at the onset of retirement as well as the age at which funds will be depleted (given assumptions on the input parameters).
Perform and report an analysis to demonstrate the sensitivity of the age at which funds will be depleted on the retirement age and the percent of annual salary contributed to retirement.