CCH Savings Plan Calculator

What this calculator does

How much do I need to save each payday to reach my goal?

What interest/growth rate do I need on my savings/investments to reach my goal?

How much do I need to start with in order to reach my goal?

How much will I be able to accumulate in "x" years?

Periodic review

More information

DISCLAIMER

The CCH Savings Plan Calculator will perform five alternative calculations to help you establish or monitor your savings plan, whether it be for an overseas trip, deposit on a home, education fund for your child or retirement nest egg:

1. How much do I need to save each payday to reach my goal?
2. What interest/growth rate do I need on my savings/investments to reach my goal?
3. How much do I need to start with in order to reach my goal?
4. How long will it take to reach my goal?
5. How much will I be able to accumulate in "x" years?

The calculator can be set for a weekly, fortnightly, monthly or annual savings amount, and for interest/growth to be compounded monthly, quarterly, half-yearly or yearly.

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Karen's goal is to have $100,000 invested after five and a half years. Karen already has $23,000 and thinks she can earn 9% per year (compounded annually). She wants to know if her goal is realistic and how much she will need to save and invest out of her monthly pay.

Karen can follow the following steps:

1. Select the button at the beginning of the row titled "Regular saving amount" (the value she wants to calculate).
2. Select "Monthly" from the drop down menu in the "Regular saving amount" row.
3. Type 23000 in the "Starting amount" box. (23,000 will also work.)
4. Type 9.00 in the "Interest rate" box.
5. Select "Yearly" from the drop down menu in the Interest Rate row.
6. Type 5.5 for the number of years.
7. Type $100,000 in the "Final amount" box.

The amount Karen needs to save each month ($780) is displayed in the "Regular saving amount row.

If this is realistic, Karen can put her plan in place. Otherwise, she may want to reset the calculator and adjust the timing to 6 or 7 years or adjust her $ goal to a more realistic level and re-calculate until she is satisfied that her plan is achievable.

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Fred's goal is to have $40,000 for a deposit on a house in four years time. He has $5,000 now and can save $100 a week. What interest/growth rate (compounded monthly) would he need to achieve this?

Fred can find out by following these steps:

1. Click on the button at the beginning of the row labelled "Interest Rate" (the value he wants to calculate).
2. Enter the four known values in the relevant boxes, ie $5000 for starting amount, $100 for regular saving amount, "weekly" for the saving frequency, "monthly" for interest compounding, 4 for years of saving and $40,000 for final amount.
3. The answer comes up "17.65%" .
4. It would be very optimistic of Fred to assume that he can average 17.65% per year on his savings over the next four years, so he will probably want to either increase his regular savings amount, increase the number of years of saving to 5 - 5.5 years or reduce his goal to say $30,000.

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Myra has inherited some money and wants to put some of it aside in a separate education fund for her child’s education. She wants to have $50,000 in the fund when her child enters private school in 8 years’ time. She doesn't want to make any further contributions, and thinks she will achieve an average return of 10% (compounded annually) from a managed fund. She will pay any tax obligations from her own earnings. How much should she invest in the fund?

Myra can estimate the amount she needs by following these steps:

1. Select the radio button at the beginning of the row labelled "Starting amount" (the value she wants to calculate).
2. Type $50,000, 8 and 10 in the relevant boxes for Final amount, Years of saving and Interest rate. Put 0 in the Regular saving amount box. Select "Annual" for the compounding frequency. (It doesn't matter what saving frequency is displayed, since the regular saving amount is 0.)
3. The answer comes up that Myra should invest $23,325 in the managed fund.

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Jose wants to take the trip of a lifetime. His first priority is to have enough money for all his planned activities. He is happy to adjust the timing of the trip to achieve that priority. When will he be ready to go?

He has saved $8,000 so far, and wants to have $30,000 for his trip. He estimates that he can earn 7% on his savings (compounded annually). He can save an additional $200 each fortnight.

Jose should follow these steps:

1. Select the radio button at the beginning of the row labelled "Years of saving" (the value which he wants to calculate).
2. Input all the other values – his starting amount ($8000), the final amount he wants for the trip ($30,000), the amount and frequency of his regular savings ($200 a fortnight), and the interest/growth rate and compounding frequency (7% compounded yearly) which he expects to achieve on his savings.
3. The calculator estimates that he will need to save for 3.5 more years.

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Angela already has in place a retirement savings plan, with regular contributions. She wants to estimate how much money she will have in her super funds when she reaches age 65.

She has 22.5 years to go before she turns 65. She has $155,000 in super at the moment, and is making contributions of $800 per month. She expects her superannuation funds to average 7% growth per annum, compounded annually.

Angela can:

1. Select the round button at the beginning of the row labelled "Final amount" (the value she wants to calculate).
2. Input all the other values – the starting amount ($155,000), the amount and frequency of contributions ($800 per month), the interest/growth rate which she expect to achieve (7% compounded annually), and the years she has left to age 65 (22.5).
3. The calculator estimates that she will have $1,201,702 when she retires.

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This calculator deals with the future, and the results will only be as good as the assumptions used. For this reason, you may want to review your plan regularly (eg once a year) by performing new calculations based on the amount you then have accumulated and any other changes of circumstances or assumptions.

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For more information on planning your financial future and appropriate investments, see your financial adviser.

CCH publishes information for professionals on financial planning, superannuation and taxation, including:

CCH Financial Planning Navigator

CCH Electronic Superannuation Library

Australian Electronic Master Tax Guide

Australian Master Superannuation Guide

CCH Electronic Tax Library

CCH Accountants Tax and Business Series

Australian Master Tax Guide (annual book)

Australian Master Financial Planning Guide (annual book)

Australian Master Superannuation Guide (annual book)

CCH Australian Superannuation Law and Practice (looseleaf subscription)

Hands on Solutions: Superannuation (looseleaf subscription)

Hands on Guide: Financial Planning (looseleaf subscription)

This calculator is made available by CCH for use subject to the following:

• the calculator (including its help file) provides general information without taking account of the particular circumstances of any individual;

• it is not, and should not be relied on as, a substitute for appropriate professional advice;

• CCH gives no assurance that the calculator is free of errors or suitable for any user’s intended purposes;

• to the extent permitted by law, CCH will not be liable for any damages or loss suffered by the user or anyone else from use of the calculator.