Finance Worksheet Downloads | FREE
Before you begin any journey, you must have a destination in mind. It also helps to have a map but many of us wander into our later years with neither. Use these worksheets from Investing Starting From Scratch to help plan your journey into the future. As the saying goes, If you don't watch where you’re going, you will end up where you're headed.
Worksheet 1: Determining Your Net Worth
Your net worth is simply the difference between what you own and what you owe. As you pay down your debts, your net worth increases. This worksheet will provide a snapshot of your net worth right now.
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Worksheet 2: Annual Expenses
Do you know where your money goes? If not, it’s time to find out. Use your bank statements, check registers, copies of bills and paycheck stubs to track your current spending. This worksheet contains formulas that will convert monthly expenses to annual totals and add everything up for you. It will take a little time and effort but don't skip this essential step in planning for your future.
Worksheet 3: Anticipated Retirement Income
To plan for retirement, you have to count your chicks before they hatch. Thinking ahead to what you can expect from Social Security, pensions and other sources will help you determine how much you will need to produce from your own investments to create a retirement paycheck.
Worksheet 4: Finding Your Number
Most investment advisers recommend withdrawing no more than 4% of your retirement savings annually to avoid running out of money. How much will you need to have invested to stay within this 4% rule of thumb and produce a stream of income—your paycheck—when you are no longer working? This is your target portfolio balance, often referred to as your “number.” Click here for step-by-step instructions for completing this worksheet.
Instructions for Completing Worksheet 4
Don’t worry about how far into the future retirement may be because you will be using figures as if you were quitting today.| Col A: | Begin with the total you calculated on Worksheet 2: Annual Expenses, then make adjustments for any changes you anticipate after you quit working. For example, fewer lunches out, less commuting, etc. Enter this adjusted total in Column A. |
| Col B: | Enter the total from Worksheet 3: Anticipated Retirement Income. |
| Col C: | The difference between the income you require and the income you expect to receive from other sources (such as pensions and Social Security) is the amount you will have to withdraw from your portfolio every year. The worksheet will do the math for you and fill this column in automatically. |
| Col D: | Your target portfolio balance or your “number” is the amount you need to maintain in your portfolio to keep safely withdrawing the amount in Column C year after year. The worksheet contains a formula using the 4% rule of thumb that will calculate this for you. |
| Col E: | On Worksheet 1: Determining Your Net Worth, you entered the balances in your retirement accounts and the current value of any other stocks, bonds or other investments you may own. Add those up and enter the total here. This is the current value of your portfolio. |
| Col F: | This column tells you how much more you will need in your portfolio to be able to produce your retirement paycheck following the 4% withdrawal rule. The worksheet will calculate this for you. |
| Col G: | Up to this point, you have been using today’s numbers as if you were retiring now. To get an idea of how much income you will need on your anticipated retirement date, you will need to adjust the amount in Column C for inflation. Using an online inflation calculator*, enter the number of years remaining until you plan to retire and an estimated annual rate of inflation. (The rate varies over time but most financial planners use an average of 3 %.) Enter the result in this column. |
| Col H: | Voila! Your “number” at retirement date. The worksheet will calculate this for you. Congratulations! But you don’t have to stop here. Now that you have established a target for what you need, you can think about your wants. What would your ideal retirement lifestyle look like? Let your imagination run free for a while and indulge your fantasies. Find some real estimates for what your dreams would cost (in today’s dollars) and then do another worksheet to find your ideal life number. |
*There are many inflation calculators on the web such as hellodollar.com or calculatorweb.com.
Tip Sheets
10 Reasons Why You Must Learn How to Invest | FREE Download