- Current age
- Your current age.
- Age of retirement
- Age you wish to retire. This calculator assumes that the year
you retire, you do not make any contributions to your retirement
savings. So if you retire at age 65, your last contribution
happened when you were actually age 64. This calculator also
assumes that you make your entire contribution at the end of each
year.
- Household income
- Your total household income. If you are married, this should
include your spouse's income.
- Current retirement savings
- Total amount that you currently have saved toward your
retirement. Include all sources of retirement savings such as
401(k)s, IRAs and Annuities.
- Rate of return before retirement
- This is the annual rate of return you expect from your
investments after taxes. The actual rate of return is largely
dependent on the type of investments you select. From January 1970
to December 2008, the average annual compounded rate of return for
the S&P 500, including reinvestment of dividends, was
approximately 9.7% (source: www.standardandpoors.com). During this
period, the highest 12-month return was 61%, from June 1982 through
June 1983. The lowest 12-month return was -39%, which happened
twice, once from September 1973 to September 1974 and again from
November 2007 to November 2008. Savings accounts at a bank may pay
as little as 1% or less but carry significantly lower risk of loss
of principal balances.
It is important to remember that these scenarios are
hypothetical and that future rates of return can't be predicted
with certainty and that investments that pay higher rates of return
are generally subject to higher risk and volatility. The actual
rate of return on investments can vary widely over time, especially
for long-term investments. This includes the potential loss of
principal on your investment. It is not possible to invest directly
in an index and the compounded rate of return noted above does not
reflect sales charges and other fees that funds and/or investment
companies may charge.
- Rate of return during retirement
- This is the annual rate of return you expect from your
investments during retirement, after taxes. It is often lower than
the return earned before retirement due to more conservative
investment choices to help insure a steady flow of income. The
actual rate of return is largely dependent on the type of
investments you select. From January 1970 to December 2008, the
average annual compounded rate of return for the S&P 500,
including reinvestment of dividends, was approximately 9.7%
(source: www.standardandpoors.com). During this period, the highest
12-month return was 61%, from June 1982 through June 1983. The
lowest 12-month return was -39%, which happened twice, once from
September 1973 to September 1974 and again from November 2007 to
November 2008. Savings accounts at a bank may pay as little as 1%
or less but carry significantly lower risk of loss of principal
balances.
It is important to remember that these scenarios are
hypothetical and that future rates of return can't be predicted
with certainty and that investments that pay higher rates of return
are generally subject to higher risk and volatility. The actual
rate of return on investments can vary widely over time, especially
for long-term investments. This includes the potential loss of
principal on your investment. It is not possible to invest directly
in an index and the compounded rate of return noted above does not
reflect sales charges and other fees that funds and/or investment
companies may charge.
- Percent of income to contribute
- The percentage of your annual income you will save for your
retirement goals. This should reflect the total you save toward
your retirement. This should include any 403(b), 401(k), or 457(b)
plans and your employer contributions to these plans. It should
also include any other retirement accounts such as an IRA or a Roth
IRA and any retirement savings in non-retirement accounts. This
calculator assumes that you make one annual contributions at the
end of each year, and any withdrawals happen once per year at the
end of the year.
- Expected salary increase
- Annual percent increase you expect in your household
income.
- Years of retirement income
- Total number of years you expect to use your retirement
income.
- Percent of income at retirement
- The percent of your working year's household income you think
you will need to have in retirement. This amount is based on your
income earned during the last year you will work. You can change
this amount to be as low as 50% and as high as 150%.
- Expected rate of inflation
- What you expect for the average long-term inflation rate. A
common measure of inflation in the U.S. is the Consumer Price Index
(CPI), which has a long-term average of 3.1% annually, from 1925
through 2008. The CPI for 2008 was 4.0%, as reported by the
Minneapolis Federal Reserve.
- If you are married checkbox
- Check this box if you are married. Married couples have a
higher maximum social security benefit than single wage
earners.
- To include Social Security checkbox
- Check this box if you wish to include social security benefits
in your retirement planning. Social Security is based on a sliding
scale depending on your income, how long you work and at what age
you retire. Social Security benefits automatically increases each
year based on increases in the Consumer Price Index. Including a
spouse increases your Social Security benefits by 1.5 times your
individual estimated benefit. Please note that this calculator
assumes that you have only one working spouse. Benefits could be
different if your spouse worked and earned a benefit higher than
one half of your benefit. If you are a married couple, and both
spouses work, you may need to run the calculation twice - once for
each spouse and their respective income. This calculator provides
only an estimate of your benefits.
The calculations use the 2009 FICA income limit of $106,800 with
an annual maximum Social Security benefit of $27,876 per year for a
single person and 1.5 times this amount for a married couple. To
receive the maximum benefit would require earning the maximum FICA
salary for nearly your entire career. You would also need to begin
receiving benefits at your full retirement age of 66 or 67
(depending on your birthdate). Your actual benefit may be lower or
higher depending on your work history and the complete compensation
rules used by Social Security.
|
