Minimum Nest Egg in Today's Dollars? [on hold]





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As a follow-on to this question, if you wanted to have a $2.5 million nest egg in 20 years, what would the nest egg value have to be today (assuming no future contributions)?



Assume:




  • 20 years until first withdrawal

  • 4.0% annual inflation

  • 8.0% annual return

  • $2.5 million future balance










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put on hold as off-topic by Aganju, Dheer, Pete B., Bob Baerker, Nathan L Nov 21 at 15:05



  • This question does not appear to be about Personal Finance within the scope defined in the help center.

If this question can be reworded to fit the rules in the help center, please edit the question.









  • 4




    I downvoted and would vote to close but I don't have the rep on this site as this is clearly homework with no effort shown.
    – Ross Millikan
    Nov 21 at 3:50






  • 6




    I'm voting to close this question as off-topic because this looks like a homework question with no solution effort shown.
    – Aganju
    Nov 21 at 6:30

















up vote
-1
down vote

favorite












As a follow-on to this question, if you wanted to have a $2.5 million nest egg in 20 years, what would the nest egg value have to be today (assuming no future contributions)?



Assume:




  • 20 years until first withdrawal

  • 4.0% annual inflation

  • 8.0% annual return

  • $2.5 million future balance










share|improve this question















put on hold as off-topic by Aganju, Dheer, Pete B., Bob Baerker, Nathan L Nov 21 at 15:05



  • This question does not appear to be about Personal Finance within the scope defined in the help center.

If this question can be reworded to fit the rules in the help center, please edit the question.









  • 4




    I downvoted and would vote to close but I don't have the rep on this site as this is clearly homework with no effort shown.
    – Ross Millikan
    Nov 21 at 3:50






  • 6




    I'm voting to close this question as off-topic because this looks like a homework question with no solution effort shown.
    – Aganju
    Nov 21 at 6:30













up vote
-1
down vote

favorite









up vote
-1
down vote

favorite











As a follow-on to this question, if you wanted to have a $2.5 million nest egg in 20 years, what would the nest egg value have to be today (assuming no future contributions)?



Assume:




  • 20 years until first withdrawal

  • 4.0% annual inflation

  • 8.0% annual return

  • $2.5 million future balance










share|improve this question















As a follow-on to this question, if you wanted to have a $2.5 million nest egg in 20 years, what would the nest egg value have to be today (assuming no future contributions)?



Assume:




  • 20 years until first withdrawal

  • 4.0% annual inflation

  • 8.0% annual return

  • $2.5 million future balance







401k retirement interest inflation






share|improve this question















share|improve this question













share|improve this question




share|improve this question








edited Nov 20 at 22:30









Mathieu Guindon

1033




1033










asked Nov 20 at 20:43









Seth

15410




15410




put on hold as off-topic by Aganju, Dheer, Pete B., Bob Baerker, Nathan L Nov 21 at 15:05



  • This question does not appear to be about Personal Finance within the scope defined in the help center.

If this question can be reworded to fit the rules in the help center, please edit the question.




put on hold as off-topic by Aganju, Dheer, Pete B., Bob Baerker, Nathan L Nov 21 at 15:05



  • This question does not appear to be about Personal Finance within the scope defined in the help center.

If this question can be reworded to fit the rules in the help center, please edit the question.








  • 4




    I downvoted and would vote to close but I don't have the rep on this site as this is clearly homework with no effort shown.
    – Ross Millikan
    Nov 21 at 3:50






  • 6




    I'm voting to close this question as off-topic because this looks like a homework question with no solution effort shown.
    – Aganju
    Nov 21 at 6:30














  • 4




    I downvoted and would vote to close but I don't have the rep on this site as this is clearly homework with no effort shown.
    – Ross Millikan
    Nov 21 at 3:50






  • 6




    I'm voting to close this question as off-topic because this looks like a homework question with no solution effort shown.
    – Aganju
    Nov 21 at 6:30








4




4




I downvoted and would vote to close but I don't have the rep on this site as this is clearly homework with no effort shown.
– Ross Millikan
Nov 21 at 3:50




I downvoted and would vote to close but I don't have the rep on this site as this is clearly homework with no effort shown.
– Ross Millikan
Nov 21 at 3:50




6




6




I'm voting to close this question as off-topic because this looks like a homework question with no solution effort shown.
– Aganju
Nov 21 at 6:30




I'm voting to close this question as off-topic because this looks like a homework question with no solution effort shown.
– Aganju
Nov 21 at 6:30










1 Answer
1






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votes

















up vote
9
down vote













The formula for future value with no contribution is just FV = PV(1+r)^n, so reversing that to find present value, you get PV = FV / (1+r)^n.



So in your case:



     2,500,000 
PV = --------- = 536,360
(1.08)^20


Note that inflation is irrelevant in your question since you didn't ask about the equivalent of 2.5 million in today's dollars. But if you wanted that, you'd just subtract the rate of inflation from r and make the same calculation.






share|improve this answer



















  • 2




    When you adjust for inflation, the number I compute is 536,360*(1.04)^20 or 1,175,230.
    – Bob
    Nov 21 at 2:03










  • Just as I was about to comment that 4% felt high, I looked at inflation for 50 years 1967-2017, and sure enough, 4.1% CAGR. Spoiled by the recent low rates, last 20 years or so.
    – JoeTaxpayer
    Nov 21 at 2:14


















1 Answer
1






active

oldest

votes








1 Answer
1






active

oldest

votes









active

oldest

votes






active

oldest

votes








up vote
9
down vote













The formula for future value with no contribution is just FV = PV(1+r)^n, so reversing that to find present value, you get PV = FV / (1+r)^n.



So in your case:



     2,500,000 
PV = --------- = 536,360
(1.08)^20


Note that inflation is irrelevant in your question since you didn't ask about the equivalent of 2.5 million in today's dollars. But if you wanted that, you'd just subtract the rate of inflation from r and make the same calculation.






share|improve this answer



















  • 2




    When you adjust for inflation, the number I compute is 536,360*(1.04)^20 or 1,175,230.
    – Bob
    Nov 21 at 2:03










  • Just as I was about to comment that 4% felt high, I looked at inflation for 50 years 1967-2017, and sure enough, 4.1% CAGR. Spoiled by the recent low rates, last 20 years or so.
    – JoeTaxpayer
    Nov 21 at 2:14















up vote
9
down vote













The formula for future value with no contribution is just FV = PV(1+r)^n, so reversing that to find present value, you get PV = FV / (1+r)^n.



So in your case:



     2,500,000 
PV = --------- = 536,360
(1.08)^20


Note that inflation is irrelevant in your question since you didn't ask about the equivalent of 2.5 million in today's dollars. But if you wanted that, you'd just subtract the rate of inflation from r and make the same calculation.






share|improve this answer



















  • 2




    When you adjust for inflation, the number I compute is 536,360*(1.04)^20 or 1,175,230.
    – Bob
    Nov 21 at 2:03










  • Just as I was about to comment that 4% felt high, I looked at inflation for 50 years 1967-2017, and sure enough, 4.1% CAGR. Spoiled by the recent low rates, last 20 years or so.
    – JoeTaxpayer
    Nov 21 at 2:14













up vote
9
down vote










up vote
9
down vote









The formula for future value with no contribution is just FV = PV(1+r)^n, so reversing that to find present value, you get PV = FV / (1+r)^n.



So in your case:



     2,500,000 
PV = --------- = 536,360
(1.08)^20


Note that inflation is irrelevant in your question since you didn't ask about the equivalent of 2.5 million in today's dollars. But if you wanted that, you'd just subtract the rate of inflation from r and make the same calculation.






share|improve this answer














The formula for future value with no contribution is just FV = PV(1+r)^n, so reversing that to find present value, you get PV = FV / (1+r)^n.



So in your case:



     2,500,000 
PV = --------- = 536,360
(1.08)^20


Note that inflation is irrelevant in your question since you didn't ask about the equivalent of 2.5 million in today's dollars. But if you wanted that, you'd just subtract the rate of inflation from r and make the same calculation.







share|improve this answer














share|improve this answer



share|improve this answer








edited Nov 20 at 21:42

























answered Nov 20 at 20:54









D Stanley

50.1k8150159




50.1k8150159








  • 2




    When you adjust for inflation, the number I compute is 536,360*(1.04)^20 or 1,175,230.
    – Bob
    Nov 21 at 2:03










  • Just as I was about to comment that 4% felt high, I looked at inflation for 50 years 1967-2017, and sure enough, 4.1% CAGR. Spoiled by the recent low rates, last 20 years or so.
    – JoeTaxpayer
    Nov 21 at 2:14














  • 2




    When you adjust for inflation, the number I compute is 536,360*(1.04)^20 or 1,175,230.
    – Bob
    Nov 21 at 2:03










  • Just as I was about to comment that 4% felt high, I looked at inflation for 50 years 1967-2017, and sure enough, 4.1% CAGR. Spoiled by the recent low rates, last 20 years or so.
    – JoeTaxpayer
    Nov 21 at 2:14








2




2




When you adjust for inflation, the number I compute is 536,360*(1.04)^20 or 1,175,230.
– Bob
Nov 21 at 2:03




When you adjust for inflation, the number I compute is 536,360*(1.04)^20 or 1,175,230.
– Bob
Nov 21 at 2:03












Just as I was about to comment that 4% felt high, I looked at inflation for 50 years 1967-2017, and sure enough, 4.1% CAGR. Spoiled by the recent low rates, last 20 years or so.
– JoeTaxpayer
Nov 21 at 2:14




Just as I was about to comment that 4% felt high, I looked at inflation for 50 years 1967-2017, and sure enough, 4.1% CAGR. Spoiled by the recent low rates, last 20 years or so.
– JoeTaxpayer
Nov 21 at 2:14



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