Accumulation and Distribution Example
A 25 year old client spends $50 a week on coffee and a couple lunches. They might consider saving it for retirement but do not think it would be worth much. How much monthly income could $50 a week produce for 25 year old when they are 65?
Data Entry
Use the following values for the prompts:
Prompt 
Value 

Calculation Type 
Accum. & Dist 

Accumulation Values 

Current Account Value 
$0 

Interest Rate 
6% 

Number of Years 
40 

Type of Distribution 
Level Deposits 

Deposits per Year 
52 

Deposit Amount 
$50 

Distributions Made at 
End of Period 

Calculated Projected Value 
$414,103.81 

Distribution Values 

Calculate 
Distribution Amount 

Interest Rate 
5% 

Number of Years 
30 

Type of Distribution 
Level Withdrawals 

Distributions per Year 
12 

Distributions Made at 
End of Period 

Future Value 
$0 

Calculated Withdrawal Amount 
$2,194.98 
In summary, with no lump sum deposit, the $50 per week of frill expenses at a relatively conservative rate of return can produce $2,194 of income per month in retirementnot a bad investment!
This example could easily be modified:
1.Include annual increasing the deposit by 2% to 3%;
2.Include a COLA of a similar value to the distribution time period; and
3.Changes to the accumulation and/or distribution time period.
Other assumptions could also be easily changed.
Sales Idea  When working with young individuals, or groups of younger individuals, this powerful tool use to run an illustration for the younger peoplethe very people who are often less included to make contributions! 