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Project Income from Defined Contribution Retirement Plan - Worksheet 2

Two examples are provided with this worksheet:
  • Example 1 is an employee who starts at age 25, quits at age 40 and draws benefits at age 55
  • Example 2 is an employee who starts at age 25 and works until drawing benefits at age 55
  • In both examples, initial monthly compensation is $2,000
The worksheet below can help you calculate the potential income available from the Defined Contribution Retirement Plan. You will need to use Tables 1, 2 and 3. You may wish to calculate the potential income several times and change the following assumptions:
  • Expected Investment Return
  • Compensation Increases
  • Number of Years until Retirement
  • Years in Retirement
  Example1 Example 2 Your Planning
Ongoing Monthly Deposits:
(Assume 11% of Gross Pay)		 $2,000 X 11%
= $220		 $2,000 X 11%
= $220		  
Annual Contributions $220 X 12
= $2,640		 $220 X 12
= $2,640		  
*Expected Rate of Return (7%) &
Compensation Increases (2%)
Working Years		 9% (total)

15		 9% (total)

30		  
Factor From Table 2 29.36 136.31  
Projected Account Balance at End
of Working Years		 $2,640 X 29.36
= $77,510		 $2,640 X 136.31
= $359,858		  
Rate of Return
Years Before Using Account		 7%
15		 N/A  
Factor from Table 1 2.76 N/A  
Projected Account Balance
At Age 55		 $77,510 X 2.76
= $213,928		 Same as above
$359,858		  
Rate of Return
Years Retired & Using Account		 5%
30		 5%
30		  
Factor from Table 3 .0053 .0053  
Initial Projected Monthly Income
from Projected Account Balance		 $213,928 X
.0053
= $1,133		 $359,858 X
.0053
= $1,907		  
*Expected "Rate of Return" is 7% and expected "Compensation Increases" is 2%. You may wish to adjust either or both, thus changing the total factor of 9%

  1. Compare Retirement Income Needs to Projected PERS Income - Worksheet 4
  2. Additional Considerations