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# Excel Formulas IFD1 r (working) = 10.00% G1 tax rate

Excel Formulas IF

D1 r (working) = 10.00%

G1 tax rate 1 = 15.00%

D2 r (retirement) = 5.00%

G2 tax bracket = \$36,250.00

D3 i =(inflation) 3.00%

G3 tax rate 2 = 28.00%

D4 beginning salary = \$40,000.00

G4 exemption = \$10,000.00

D5 income growth rate = 5.00%

D6 first withdrawal =

G6 contribution limi \$17,000.00

D7 savings rate = 10.00%

G7 employer match 6.00%

D8 current age = 25

D9 retirement age = 65

D10 life expectancy = 90

Total Taxes

Total Taxes Formula I have =IF(F21<\$G\$2,F21*\$G\$1,F21*\$G\$3 Taxes are to be calculated for income below \$36250 at 15% and all income above \$36250 taxed at 28%

Formula I have =IF(F15\$D\$9,0,L19*\$D\$1) The formula needs corrected to (10% D1)during working years but when goes to retirement years need to be (5% D2) when I go to add I get an error stating too many arguments

I need a formula to deflate the nominal withdrawal by the (inflation rate 3% D3) In other words, the real withdrawal in the first year would be the nominal withdrawal divided by (1+i). In the second year, it would be divided by (1+i)^2, etc.

I need a formula for Real consumption relates to nominal consumption in the exact same way that real withdrawals relate to nominal withdrawals.

The-PC-Guy :

is it possible to send an example file

could you provide a sample worksheet.

you can upload a copy to

www.wikisend.com

after uploading you would be given a file ID# XXXXX that site

paste that number here.

Thanks
Customer: replied 3 years ago.

How do I attach the spread sheet?

absolutely

you can upload a copy to an external website

www.wikisend.com

after uploading you would be given a file ID# XXXXX that site

paste that number here.

Thanks
Customer: replied 3 years ago.

FI4240_Proj1_Heaton_Daniel.xls File 512144

Tax Environment

For simplicity, assume that the following progressive tax structure will be in place for the entirety of Jane’s life. There is a personal exemption of \$10,000. Taxable income from \$0 to \$36,250 is taxed at 15%, and taxable income above \$36,250 is taxed at 28%.

In years prior to Jane’s retirement, her investment account will earn a 10% annual rate of return. When she retires, she will shift all of her retirement assets into saferinvestments earning 5% per year.

• Assume that all withdrawals from the 401k will be taxed as ordinary income. Assuming that Jane only uses her 401k to save for her retirement and that she wants her withdrawals to be constant in real terms,

The columns I am having a problem with on the formulas is

Investment Income, Total Taxes, Withdrawal, Real Withdrawal, Consumption Real Consumption.

I have also upload another spread which has answers but no formulas and I have to provide the formulas File ID 898902

ok, give me a while to work on this, see if I can follow your math and fix up the formulas.
Customer: replied 3 years ago.

Thank you and good luck with this did you get the spread sheet that has answers but no formulas???

yes.

is it the same as the other one though.

because I can just work from the one with the formulas.
Customer: replied 3 years ago.

I know but this one has the answers to see if the formulas are correct

ok, got ya.

what is the difference by the way between withdrawal and real withdrawal.

and do withdrawals only start once the age in column B reaches the value of D9?

Customer: replied 3 years ago.

Yes the withdrawals only start once Column B reaches Value of D9

The first withdrawal is determined using goal seek to solve for the withdrawal that sets the account value to zero once we reach life expectancy. nominal withdrawal is not constant. The real withdrawal is. You need to deflate the nominal withdrawal by the inflation rate 3% D3 . In other words, the real withdrawal in the first year would be the nominal withdrawal divided by (1+i). In the second year, it would be divided by (1+i)^2, etc.

ok, here is what I have so far. Hopefully it will set you on the right track.

http://ge.tt/47mWF4t/v/0?c

there are a couple of issues I am having getting it to match the answers, either because the answers are wrong, or some of your formulas are wrong.

Investment Income - this should now be correct

Total Taxes - your formula should be correct assuming there are only 2 tax brackets and the tax rates are correct. however they have different answers for some which leads me to believe you are missing tax brackets, have the wrong rates, or their answers are wrong,

Withdrawal - this should now be correct

Real Withdrawal - this should be correct, however they have 70 some odd thousand and I have no idea how they arrived at that figure.

Consumption- this should be correct based on your formula I think as the first few values match however i think that the difference in tax values is what is causing a diference in numbers as that is included as part of your formula -

Real Consumption - this should be the correct formula now, however if the numbers are off it is because of the difference in tax values as described above.

------------------

let me know if you need further help on this, or if you can determine how their numbers are so far off, or are their answers even correct?

Customer: replied 3 years ago.

Total Taxes - your formula should be correct assuming there are only 2 tax brackets and the tax rates are correct. however they have different answers for some which leads me to believe you are missing tax brackets, have the wrong rates, or their answers are wrong,

The taxes are a progressive tax structure in place for the entirety of life. There is a personal exemption of \$10,000. Taxable income from \$0 to \$36,250 is taxed at 15%, and taxable income above \$36,250 is taxed at 28%.

Tax should be charges 15% on the first \$36,250 and 28% on the amount over \$36250

I do not know how to write the formula

ok, i think I can fix that

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http://ge.tt/6T6JQ4t/v/0?c
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Customer: replied 3 years ago.

Okay I am back the formulas is making all the numbers at the bottom of the spread sheet is incorrect. Once the client reaches life expectancy at 90 the remaining spread sheet has to be zero.

Life Expectancy is D10 The formula has to be the same all the way down and can not change in middle of spread sheet

I have highlighted in yellow.