Retirement Calculators

Many people imagine a secured future by the time they reach their retirement age.


But only a few have truly worked out the estimated amount of income they need to retire happily. Because most people are not aware about the importance of using Retirement Savings Calculators.


By using retirement calculators you can easily foresee the probable amount of money you will earn by the time you retire.


This way you can easily plan the necessary retirement savings you have to make to achieve your desired retirement amount in the future.


Finding out how much to save to arrive at your desired amount is easily computed on a yearly investment. From there, you can work towards a more reachable goal.


For more difficult situations, there are several online retirement calculators online and in software form. Many retirement calculators project how much you need to save, and for how long to provide a acceptable level of retirement expenditures.


Note: Some financial retirement calculators, appropriate for safe investments, assume a constant, unvarying rate of return. Monte Carlo retirement calculators take volatility into account, and project the probability that a particular plan of retirement savings, investments and expenditures will outlast you after retirement. Retirement calculators vary in the extent to which they take taxes, social security, pensions, and other sources of retirement income and expenditures into consideration.


The computation is, however, dependent on several factors. It does not necessarily mean that using retirement calculators will guarantee your future. Here are the items that you have to consider when using a retirement calculator:


1. Your current age and your desired retirement age


This will greatly affect the results in the retirement calculator. The available years from your current age up to your desired retirement age will determine the amount of money in savings you have to accumulate in order to reach your goal.


For instance, if you have fewer years to save, then your retirement calculator will tell you that to invest more money if you want to retire with considerable amount of disbursements.


2. Life expectancy


Your expected life expectancy will also affect the result in your calculator.


3. Inflation rate


4. Social Security Disbursements


5. Rate of ROI (return of investment)


These are just some of the probable factors that you have to consider when using retirement calculators. All of these things will have effects on the results.


Financial experts recommend some feasible solutions to avoid possible confusions and errors in using a retirement savings calculator. Here’s how:




1. Be careful when you choose factors


Some people tend to pick some factors when using a retirement calculator. Any errors in the selection will constitute clear negative effects on the results. It is important to be cautious in selecting a particular factor.


For instance, if you will be using the "rate of return of investment," it is better if you use a lower rate than what the current or even the best possible rate available.


2. Don't stop at a single computation


Experts recommend that you evaluate the factors that you have used during your first run through the computation. Remember that these factors may vary as the time pass by.


3. Experiment with the numbers and calculations


Don't stop from where you have started. In order to reach your desired retirement financial goal, it is best that you experiment on the variable factors that will greatly affect the results.


For example, inflation rate is highly changeable. Experimenting on its different rates will provide you considerable low and high rates.


4. Always seek a retirement planning professional


Do not depend on the retirement calculator tool alone. It is always important to seek the help of a professional.


A straightforward retirement calculation can be done if we assume that interest, after expenses, taxes and inflation is zero.


Let's say that in after-inflation terms, your salary never changes during your w years of your working life.


During your p years of pension, you have a living standard which costs a replacement ratio R times as much as your living standard in your working life. Your working life living standard is your salary less the proportion of salary Z that you need to save.


Calculations are per unit salary, e.g. assume salary =1. Then after w years work, retirement age accumulated savings= wZ. To pay for pension for p years, necessary savings at retirement=Rp(1-Z)


Equate these: wZ=Rp(1-Z) and solve to give z= Rp/ (w + Rp). For example, if w=35, p=30 and R=0.65 we find that we need to save a proportion z=35.78% of our salary.


Retirement calculators generally accumulate a proportion of salary up to retirement age, as illustrated in the clickable 'nut accumulation' example on the left. This shows a straightforward case which nonetheless could be practically useful for optimistic people hoping to work for only as long as they are likely to be retired: more information about this is at retirement



Retirement Calculators | Planning Retirement Calculator

Savings Retirement Calculator | Pension Retirement Calculator