Retirement is something most of us look forward to and dread all the same. After spending a significant portion of your life swimming in responsibilities, letting go is a welcome change. However, the dreadful part comes when you realize you do not have much of a retirement plan. In other words, your retirement savings are few and far between.
Our handy calculator lets you plan for this right from today. Regardless of how far along you are in your career, it is never too late to start planning for the future. With just a few details about your income and saving habits, we will tell you how to plan your finances accordingly.
Planning for the future also means accounting for inflation. Check out our inflation calculator to know more.
How To Calculate Retirement Savings
In this section, we’ll tell you how exactly to calculate your retirement savings using our calculator. Additionally, we’ll also tell you the information you need to keep at hand and what exactly the results mean.
What You Need To Know Beforehand
Before you can get to using the calculator, it’ll be easier if you know what exactly to keep ready. First and foremost is your retirement age. This age varies based on where you’re from and a whole lot of other criteria. Once you get your retirement age, you can quickly figure out how many years you have left to build up some savings.
The accumulation phase for your investment begins when you’re still working. During this time, getting as much return on your investment as you possibly can is essential. You’ll need at least an approximate idea of this to enter into our calculator. Aside from this information, you’ll need to know your income and an approximate idea of how much it will grow annually.
In the case of retirement components of your salary, like 401(k), you need to know how much the employer matches the employee contribution. You will also need to consolidate all your income streams and know how much each one contributes. Some streams of income will continue even after your retirement. Make a note of the percentage increase of such income as well. Lastly, keep a tab of how much of your income you are saving, or intend to save.
How To Use The Calculator
Once you have all this information at the ready, it is just a matter of filling in the required details. You can choose between a variety of options in some of the fields. You can choose between different payment cycles. Furthermore, you can select when you want your retirement income to kick in. Pick the ones that best describe your situation. For details on the inflation rate, a simple Google search can yield accurate data, regardless of the location from where you’re using this calculator. Once you are done with all of this, review the details and then click “Calculate!” The results will show up right below the calculator.
Interpreting The Results
Now for the most crucial part of using the calculator – the results. This calculator gives you a host of information that you can use to plan effectively. “Total needed to fund 100% at retirement” is the amount you’ll ideally need to save up by the time you hit your retirement age. “Shortfall at retirement,” as the name suggests, indicates how much you fall short by, given your plans. This number is important, as you can see what needs to be tweaked to hit your goals.
The three fields at the bottom show essential information. The titles are self-explanatory, but they carry a lot of value. It directly shows you how your current plans stack up to your expectations. And we also show you how much you should ideally be saving to reach your goals. With this information, you can then plan out your investment portfolio accordingly.
Undoubtedly, retirement is a crucial part of all our lives and one that comes at the fag end of our life. This fact makes the planning phase even more important. Our calculator aims to nudge you in the right direction for you to have the retirement of a lifetime!
Want to know how your investment will pay you back over time? Check out our ROI calculator.
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