Christmas Bonus – Crossover Play

Ok, I wasn’t planning on giving you a gift, but I’ve broke down and decided to release a little side tool I’ve developed while working on the retirement spreadsheet to predict when you become financially independent.

The Excel file is listed below and called “Crossover Play” in honour of the cross over point from the book Your Money or Your Life.  To use the file you need to input the dollar value of your current retirement savings.  Then you enter your expected rate of return for your investments and your expected inflation rate.   Then you add in your expected expected annual expenses in retirement (in today’s dollars). The last parameter is used to show if you are constantly getting raises in excess of inflation and assumes you are adding that money to your retirement pool of cash.  So basically you are increasing you savings by this annual amount on annual basis.

After that just check out when your light blue line on the graph crosses over the dark blue one and note the year.  At that moment you don’t have to work any more.  You can continue to work, but that would just provide more income (ie: follow the light blue line as it goes up).

Notes:  This is only based on annual returns and is to be used only as an illustration.  Basically it allows you to determine how sensitive your cross over point is to changing factors.  Please beware I’m making no guarantees or warranties if you use this file.  It’s strictly as is and to be used at your own risk.  By downloading this file you have agreed that you have read this warning and agree to it.

Crossover Play

5 thoughts on “Christmas Bonus – Crossover Play”

  1. George,

    The $10,300 saving rate was just a number I picked from the top of my head to approximate my own savings rate on an annual basis.

    That was a little issue I forgot to fix prior to sending it out. You can alter that initial saving amount by just typing in your number over the $10,300 in the first line in the results section.

    Thanks for pointing it out I’ll have to fix that up and put up a new version.


  2. Thanks for the calculator, it’s exciting to have it reaffirmed that I can actually retire right now if I choose (I’m 42). I just started working at a new company however, and have 2 more years to put in before my pension vests. Plus, since I’m earning a pretty good salary, and have some contribution room to use up in my RRSP and don’t totally hate my job, I’m willing to put in a few more years until I can take that ‘extended (perhaps permanent) sabbatical’ in my RV. My goal is to retire by 45 as well – so 2.5 years away!
    Excellent site by the way, and it’s good to see a Canadian money blogger.
    For your readers, I just want to mention that I have been a single mom for the last 20 years (2 kids, now 20 and 7), if I can do it totally on one income (never married/lived with someone), I don’t understand why other people can’t do it on two. I’ve made a few personal sacrifices such as “going the extra mile” at my jobs in order to maximize my income and working in a field and city where the money is right now (finance in Calgary). In conjunction with my basic frugality (I wasn’t always frugal and was in debt until about 35), I save about 1/2 my salary and could easily live on about $25k per year in a less expensive area than Calgary. Even though that’s less than what I pay in taxes right now! 🙁

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