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Retirement Planning Calculator

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A worry - free post retirement life entails serious financial planning and savings. Retirement can become one of life's most stressful experiences if not well planned or provided for. With increased life expectancy levels, retirement planning can span even twenty years. Therefore systematic planning should ensure that an individual's money and savings last as long as they do.

The type of lifestyle that the retired person is accustomed to living and the type of investment opportunities that can help sustain that lifestyle are important considerations when planning retirement finance. The retirement planning calculator is a simple device that helps to assess the present financial situation, the level of savings that would be required in order to plan and enjoy a retirement life style of your choice. Using this calculator, one can find out how much money is needed during retirement and whether one has current savings plan that could get to the retirement goals.


Retirement Planning


Having complete, current information about your retirement benefits is vital to determine adequate retirement planning. The retirement planning calculator helps to estimate the potential shortfall between the expected retirement income and current investment and savings income. The calculator works step by step.


  • First it helps figure out how much money would be needed on retirement.

  • Then it shows the current financial status of the person.

  • Then it calculates the shortfall between the actual situation and the projected goal on retirement.

Based on the shortfall, one can start looking for new savings opportunities or make alterations in the retirement financial plan. The retirement planning calculator provides a chart and illustrates how the projected savings compare with the retirement goal. The retirement planning calculator presents the scenario of how any changes in the savings plan will inevitably alter the retirement goal. The basic information required by the retirement planning calculator for calculation is as follows:


  • Current age

  • Desired retirement age

  • Life expectancy

  • Current income

  • Typical annual raise

  • Desired annual income in retirement

Some of the parameters that are essential for retirement financial planning are:


  • How much money have you saved currently?

  • What is your monthly income?

  • What percentage of your income are you contributing to 401(k) or any other retirement plan?

  • What is the percentage of contribution by your employer?

  • What is the rate of return on your investment?

  • How many years of service do you have until retirement?

Retirement Planning Calculator

A good retirement planning calculator aids in the following tasks:


  • Selecting the age at which payments should begin. The age group would be generally between 55 years to 69 years.

  • One has to determine and target how much income you would like to retire with. Normally 65% to 75% of your salary will be adequate.

  • Identify your source of retirement income. Some of the retirement sources of income are employment pension plan, government pension plan and old age security programs.

  • Projecting the various sources of income. The retirement income target is compared with your projected income and the methodologies to bridge the gap between the two have to be worked out.

Most retirement planning calculators are user friendly. The retirement planning calculator is not a one-time calculation. The calculator has to be revisited periodically as the financial situation and goals may change over time. Investments do not change at retirement. The rate of inflation has to be factored in. The retirement planning calculator works on the following assumptions:


Investment = Savings - first year expenses

For a quick analysis, the retirement planning calculator makes assumptions about your situation, retirement age, and length of service, tax payments, security benefits, investment growth rates, inflation and rises. A comprehensive retirement planning calculator helps to determine if your current plans for retirement will be sufficient. If you are 50 years or older, present retirement plans give ample opportunity to put away 'catch-up' contributions. The retirement planning calculator calculates spending, saving and investing decisions on retirement.


Retirement planning ideas

No matter how old you are, it is never too early to start planning for retirement. Retirement planning includes so much more than just simply planning to rely on social security. Planning should include debt reduction, budgeting, diversifying investments, and believe it or not, maintaining good health through diet and exercise.

The question of health is also vital during old age. Health costs can be a major expenditure and a drain on retirement savings. Even if a person holds Medicare insurance, there are many procedures and prescriptions that need to be adhered and only sometimes certain illness are partially covered or not at all covered under insurance benefits. Therefore adequate planning has to be done for maintaining and living a healthy life. Leading a healthy life style early can positively affect retirement planning. Based on the results of the retirement planning calculator one has to reinvigorate one's retirement planning.


Retirement planning guide

Rebalance your retirement accounts: The percentages made into the retirement accounts have to be reviewed and necessary adjustments made. Some may want to rebalance their savings back to their original allocations.

Make contributions to IRA: There is a limit to IRA contributions of $ 5000 if you are aged 50 and above.

Contributions to 401 (k) and other plans: This is the right time to consider increased contributions to plans like 401 (k) and other salary deferral plans.

Consider catch up contributions: If you are above 50 years of age, then you may be able to save beyond the general contribution limits. It would be wise to make use of this opportunity and put more money away for retirement.

Get a tax credit for your contributions: Some of you might be eligible to claim tax credit for contributions made to 401 (k) and other retirement plans. The tax credit varies if a person is single or married. Some may have the opportunity to pay less tax and also qualify for a tax credit upto $ 1000. One has to look into such opportunities in detail. A tax consultant may be consulted for such benefits.

Update your beneficiary designations: If one has ideas to get married or have a child, then it would be better to update the retirement plans and IRA beneficiary designations.


Limitations of retirement planning calculator


  • The retirement planning calculator is for illustrative purposes only. It is not intended to provide an investment advice of any sort. It also does not portray actual investment results. This is because one's financial situation and goals might change.

  • The investment results from the retirement planning calculator is bound to vary considerably depending upon the type of securities involved, general market conditions and other factors.

  • It is important that one periodically reviews and updates the retirement plans every year. It is essential to seek the help of a financial adviser based on the results of the calculator. Tax aspects should be discussed with a qualified tax professional.

  • The scope of the calculator is limited, as the calculator does not take certain factors into account. Factors like holding periods for investments, early withdrawal penalties, minimum distribution amount, protection against loss, annual rates of return, which are hypothetical, non-reflection of actual investment results.

  • Results of the calculator may vary based on actual market conditions.

Nowadays, fortunately the amount of money one can contribute to retirement plans is steadily increasing year after year. Retirement planning involves setting aside enough money during one's working years to provide adequate income during retirement. The famous adage 'to enjoy the shade, the seed should first be planted' is most relevant when it comes to retirement financial planning.

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Retirement Planning Calculator

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