For the 2nd part of this plan, we need an understanding of how much money an individual would need in the future for retirement. For this step, assume an individual needed the following amounts to retire, how much would he or she have to invest today?

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Part 1

For the first part of this plan, we need to calculate the rate of return of our
retirement savings will earn until we reach our retirement age (67 years
old). To do this we are, you will need to estimate the 5-year average rate
of return of the stock market (you should use the S&P 500 stock index,
which can be researched at finance Web sites) using the table below:

S&P 500 Index Value 5 yrs. ago (PV)	S&P 500 Index Value Now (FV)	Number of Periods (NPER)	5-Year Return on S&P 500 Index (RATE)
		5

After calculating the 5-Year Return on the S&P 500 Index (RATE), determine
how long it will take for an investment to double using the Rule of 72. Now
that you have an understanding of the return in the market, you need to
think about planning for future retirement.

Part 2

For the 2nd part of this plan, we need an understanding of how much money an
individual would need in the future for retirement. For this step, assume
an individual needed the following amounts to retire, how much would he or
she have to invest today?

The future value of the accounts is given in the table below.

The rate of return we are assuming will be the 5-Year Return on Top 500 Stocks
you calculated in the previous step.

For the years to retirement, assume retirement age is 67. Calculate the
difference between retirement age and the current age of a 35-year-old
individual.

Now you are ready to calculate the present value of the following amounts (FV
of Account).

• $1,000,000
• $2,000,000
• $4,000,000

FV of Account (Given)

5-Year Return on Top 500
Stocks (RATE)

Years to Retirement (NPER)

Find PV of Investment

$ 1,000,000

$ 2,000,000

$ 4,000,000