This tool will help you estimate how much money you may have when you retire based on your current financial situation and plans.
How to Use the Retirement Estimator
This Retirement Estimator helps you calculate the amount you need to save and the amount you will have by the time you retire based on your current savings, annual contributions, expected rate of return, and expected annual expenses in retirement.
- Current Age: Enter your current age.
- Desired Retirement Age: Enter the age at which you wish to retire.
- Current Savings ($): Enter the amount of money you currently have saved.
- Annual Contribution ($): Enter the amount of money you plan to contribute to your savings each year until you retire.
- Annual Return on Investment (%): Enter the expected annual return on your investments.
- Expected Annual Expenses in Retirement ($): Enter your expected annual expenses during retirement.
- Click the Calculate button to see your results.
How the Calculator Works
The Retirement Estimator uses the following formulae:
- Future Value of Savings: The calculator calculates the future value of your current savings using compound interest. The formula used is:
Future Value = Current Savings * (1 + Annual Return)^(Years Until Retirement). - It then adds the future value of your annual contributions to this amount using a similar formula.
- Retirement Fund Needed: The calculator determines the amount of money you will need to cover your annual expenses in retirement by assuming you will withdraw a certain percentage of your savings each year. The formula used is:
Retirement Fund Needed = Annual Expenses / Annual Return.
Limitations
This calculator provides an estimate based on the data you input. Real-life investment returns are subject to market risks and may vary. The calculator does not account for taxes, fees, or changes in your financial situation. Always consult a financial advisor for personalized financial advice.
Use Cases for This Calculator
Calculate Retirement Savings
Enter your current age, planned retirement age, current savings amount, and monthly contribution to estimate your retirement savings goal. The calculator will provide you with the total savings you will have at retirement based on your inputs.
Explore Different Scenarios
Adjust your retirement age and monthly contributions to see how they affect your retirement savings goal. Experiment with different scenarios to better understand how changes in your savings strategy can impact your future financial security.
Account for Inflation
Factor in inflation by entering the expected annual inflation rate. This feature allows you to see the real value of your retirement savings and ensures that you account for the increasing cost of living over time.
Consider Investment Returns
Specify the expected annual rate of return on your investments to see how it affects your retirement savings projection. Understand the impact of investment growth on your savings goal and make informed decisions about your investment strategy.
Plan for Retirement Expenses
Estimate your retirement expenses by entering your expected monthly expenses post-retirement. The calculator will show you if your retirement savings are sufficient to cover your projected expenses and help you make adjustments as needed.
Assess Pension Contributions
If you have a pension plan, enter the expected monthly pension amount to include it in your retirement savings calculation. This feature gives you a more accurate picture of your retirement income and helps you plan for your financial future more effectively.
Account for Social Security Benefits
Include your estimated monthly Social Security benefits to see how they contribute to your retirement income. Understanding the role of Social Security in your retirement planning helps you optimize your savings and make the most of your benefits.
Monitor Retirement Progress
Track your progress towards your retirement savings goal by regularly updating your savings amount and contributions. The calculator shows you how close you are to reaching your target and motivates you to stay on track with your retirement savings plan.
Adjust for Life Events
Be prepared for unexpected life events by adjusting your retirement savings plan accordingly. Whether it’s a job change, salary increase, or financial windfall, use the calculator to see how these events impact your retirement savings and adjust your strategy as needed.
Share Results with Advisor
Generate a report based on your inputs and share it with your financial advisor for personalized advice. Your advisor can help you fine-tune your retirement savings plan based on your unique financial situation and ensure that you are on the right track towards a secure retirement.