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| 1 | http://numbercanvas.com/ | |
| 2 | ||
| 3 | // calculation from article | |
| 4 | ||
| 5 | pmt = 80000 | |
| 6 | base = 2*10^6 = 2000000 | |
| 7 | pmt/base= 0.04 | |
| 8 | i = 4/100= 0.04 | |
| 9 | ||
| 10 | // this reflects a perpetuity (forever money that can be passed from generation to generation) | |
| 11 | // but pensions stop when you die | |
| 12 | // so lets calculate the present value based on average life expectancy, at the given interest rate | |
| 13 | ||
| 14 | // Early Retirement, Average Lifespan | |
| 15 | age_retirement = 55 | |
| 16 | age_death = 75 | |
| 17 | yrs = age_death - age_retirement = 20 | |
| 18 | pv = pmt*(1-(1+i)^(-yrs))/i= 1087226.107597416 | |
| 19 | // $1 million | |
| 20 | ||
| 21 | // Early Retirement, Long Lifespan | |
| 22 | age_retirement = 55 | |
| 23 | age_death = 90 | |
| 24 | yrs = age_death - age_retirement = 35 | |
| 25 | pv = pmt*(1-(1+i)^(-yrs))/i= 1493169.058545419 | |
| 26 | // $1.5 million | |
| 27 | ||
| 28 | // Average Retirement, Long Lifespan | |
| 29 | age_retirement = 65 | |
| 30 | age_death = 90 | |
| 31 | yrs = age_death - age_retirement = 25 | |
| 32 | pv = pmt*(1-(1+i)^(-yrs))/i= 1249766.395492072 | |
| 33 | // $1.25 million | |
| 34 | ||
| 35 | // Average Retirement, Average Lifespan | |
| 36 | age_retirement = 65 | |
| 37 | age_death = 75 | |
| 38 | yrs = age_death - age_retirement = 10 | |
| 39 | pv = pmt*(1-(1+i)^(-yrs))/i= 648871.662348403 | |
| 40 | // $650,000 | |
| 41 | ||
| 42 | // Early Retirement, Short Lifespan | |
| 43 | age_retirement = 55 | |
| 44 | age_death = 62 | |
| 45 | yrs = age_death - age_retirement = 7 | |
| 46 | pv = pmt*(1-(1+i)^(-yrs))/i= 480164.373595873 | |
| 47 | // $480,000 |
