Retirement Savings Calculator

Many people have a growing fear about financial security after retirement which is why many are now choosing to consult a retirement savings calculator before the actual day arrives. Thrifty, prudent people are beginning to worry that their thrift will not be enough.

How is it possible to determine if enough money has been put aside or properly invested?

Types of Retirement Savings Calculator

Several different methods are available to help plan. A military retirement calculator computes payments for military retirees. Payments for federal civilian employees are computed using a FERS retirement calculator (Federal Employee Retirement System).

A retirement planning calculator helps determine how much retirement money you will need and whether your ongoing savings and investment plan is adequate. A retirement savings calculator can help estimate the funds you might need for your retirement and how much more you need to save to achieve your goal.

A retirement calculator is specifically designed to aid in determining annual amounts needed to achieve your retirement goal. Although some factors such as retirement account contributions, investment rates of return, and longevity are somewhat variable over time, a fairly close estimate can be made. This is known as “required savings”. The calculator is easy to use; you only need to input some numbers and answer a few questions.

“Required Savings” – How Much Will You Need?

For your retirement savings calculator to be accurate and representative, you will first need to decide how much money you will need in your retirement years. A general rule of thumb is around 80% of what you make now, though it should be more if you will need to pay for your own health insurance.

Next you will enter the amount of Social Security and pension funds you expect to receive. Other questions such as how much retirement savings have you already accumulated, how much will you draw from home equity, and how many years will you expect to live in retirement will be asked.

Your investment style plays a part in the process, too. Even if your current style is aggressive, expect to change it to a moderate style once you are in the retirement phase. Once you have all your values input, the program will analyze the information and tell you what you should be contributing each month. Once you determine that, you can decide how you need to adjust.

You may need to contribute more annually, you might need to wait a bit longer to retire, or you may need to revise what you expect to spend once you retire.

Occasionally you may have to do all three – lower your retirement expectations and have a larger annual contribution and work longer before retiring.

Retirement Savings Calculator Assumptions – Life Expectancy, Taxes & Inflation

Some key assumptions are made in areas such as life expectancy, taxes, and inflation. Any retirement savings calculator assumes that you will live to age 90. Current average life expectancy is nearly 77 years, but a person who is age 65 today is predicted to live until age 83.

Your retirement contributions thus far are expected to be pre-tax, which means that your retirement income will probably be taxed. The effect of inflation on your investments and income is figured by the calculator and cost-of-living adjustments are made.

The information you receive after calculating your retirement savings can be troubling or reassuring.

However, it is much wiser to have a general idea of your future income so that you can make any needed adjustments now. An accurate assessment of your current situation and all the variables in your retirement savings calculator allows you to be prepared for when you retire.