RETIREMENT 101: USING RETIREMENT PLANNING WITH EXCEL TO DEMONSTRATE INTEREST COMPOUNDING

• Published in: Journal of economics and economic education research 2017-09, Vol.18 (3), p.1-12
• Main Author: Burnett, Nancy J
• Format: Article
• Language: English
• Subjects: Adult Learning; Adult Students; Basic Skills; Calculators; Classroom Communication; Classrooms; Compound interest; Economics Education; Homework; Interest rates; Learning Modules; Life expectancy; Medicare; Money Management; Present value; Retirement; Retirement planning; Spreadsheets; Student Research; Students
• ISSN: 1533-3604; 1533-3590

This paper provides a lesson on compounding interest calculation as applied to retirement planning using an EXCEL spreadsheet. Detailed instructions for instructor preparation, a student assignment, the class demonstration and various methods of student debriefing are included. An ideal venue for this lesson would be an introductory finance course not specifically targeted to business majors, though this learning module fits into any course that includes a section on personal financial management or one that explores compounding interest and present/future value calculations. The basic lesson is designed for lower division courses, but additional material is provided to make it more appropriate for upper division courses including material on various investment vehicles, social security regulations and mortgage calculations. While the lesson is designed for students with minimal exposure to EXCEL, there are extensions to the lesson appropriate for students with more EXCEL experience. The classroom part of this lesson uses approximately one to one and a half hours of class time and employs an EXCEL spreadsheet available from the author. Experience has shown that this lesson has significant impact on students and has prompted several students to opt into employer provided savings plans such as 401k plans and even open their own individual retirement accounts.