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Subject: Making a Graduate Annuity  Date: 4/28/2013 1:13 PM 
Author: mikemason323  Number: 72115 of 79729 
Hi everybody, I have a question I wish someone would help me with. It may even show you something that will allow you to retire sooner. My question is this, every time I read or asked retirement advisers how much I should save they say around $1 Million. Most people when they hear this say that it is impossible for them to save that much and put all their hopes on winning the lottery. Last year my wife and I spent about $32,000 on expenses. The S & P 500 has a 10 year load adjusted return of 8.12%. Likewise, the 10 year average inflation rate is 2.42%. I am using 10 year averages to mitigate the swings in the actual numbers. I want to set up my own annuity to pay expenses for retirement. Most annuities you buy take out a chunk of money for themselves. Although you can do the same thing with cash flows and NPV there is an easier way. I found this excel accounting equation by a genius named Timothy R. Mayes, Ph.D. for a graduate annuity which states: =PV((1+B4)/(1+B3)1,B5,B2,0,0)/(1+B3) You can copy and paste this equation into an excel spreadsheet and type the following numbers into the appropriate cells. B2= Initial Cash Flow of $32,000 , B3=The Growth or Inflation Rate of 2.42%, B4=The Discount Rate or S&P 500 10 year load adjusted return of 8.12%. B5= Years the annuity will pay you. Since most will want to retire at 67 to get full social security benefits and the average life expectancy for 65 year old man is 