Author: Michael Krabach, P.E. retired
This program combines both investing before retirement and divesting after retirement. Using these values it solves the allowable yearly withdrawal after retirement. The program allows for a lump sum investment to be included at the start of any yearly payments. Any investment payments after any initial lump sum are assumed to continue until retirement. So you can start the analysis at any point in your life, either at the start, the middle, or at the end of your investing career. In the sample data below, the user is assumed 50 yrs old with a current investment worth of $250,000 and chooses to invest $8000/yr (inflation adjusted) until retiring at 65. If you click on 'Calculate Output' you will see how much this investment scheme is worth at retirement.
Inflation is often not included in an analysis, but can drastically affect a retirement investment because it effectively devalues the dollar. Therefore any payments into the fund are assumed increased by the inflation rate and any withdrawal amounts are also increased by inflation. The program gives results in present (constant value) dollars, which negates the depreciating effects of inflation, and in future (after inflation) dollars. If you have clicked on 'Calculate Output' below, you can now see the effect of inflation by clicking on 'Generate Cash Flow Tables'.
For this overall look at investing, assumed average yearly inflation and investment rates are used, and are adequate for this kind of analysis. The compounding convention used is 'payments-at-beginning' of the period. Sample input data may be cleared and/or individual data may be changed before recalculating. For a DOS program (will run under Microsoft Windows) that is the mathematical algorithm for this program (including other variations), plus sample outputs, link here.
NOTE: This program may not be used on commercial sites, except by authorization from the author.