Rex Truman asked:


A retirement calculator is one of the most useful things you can use when planning your retirement savings. You see most people plan for retirement without any idea of how much they need to save, or how much they want in retirement. A retirement calculator provides the answers.

A retirement calculator shows you how much to need to save to get the income you need when you retire. Or it may be how much you want! That depends how much you are making, and how young you are. Either way do use a retirement calculator.

You can find a retirement calculator on many web sites, so you do not need to get the services or a retirement planner or investment advisor to find the answers. In this way, you use the retirement calculator, calculate the amounts you need, and then visit an investment advisor or retirement planner.

To decide how much you need to save, you need:

1. The income you need to live on at today’s prices

2. The rate of inflation per annum between now and the retirement date.

3. The rate at which your fund will grow.

Let’s go through these and how they relate to a retirement calculator. First, how much do you need to live on? Remember, that retired people do not normally spend as much as people who work. When you retire, you won’t need:

special clothes for work the sort of car that keeps you up with the Joneses

you will be able to take holidays at off-peak times

and you will have time to do things – instead of paying to get them done.

So your costs will be lower. So let’s say you are earning $60,000 a year now, you might think that $50,000 would be enough. Next you need to remember that if you are healthy, you expect to live for 15-20 years, and so need to allow for inflation in that period – so actually you need more! This is where a good retirement calculator comes in.

2. The next thing the retirement calculator needs is the rate of inflation, or what you expect it to average until you retire. With the price of oil going up, we know that inflation over the next decade will be higher than it is now. Official figures put inflation at around 2-3%, but the true figure is more like 5%.

This means that you need to allow for at least 5%, and probably 7% and feed that into the retirement calculator.

4. At what rate will your retirement plan grow? A difficult one this. Five years ago, people were talking in terms of 10%, but not now experts suggest a lower figure. The problem is that a retirement fund or retirement plan has to be prudent – you don’t want to wake up one morning, a year or before you retire, to find that a crash on Wall Street has cut the value of your fund by 30%. You just won’t have the time to get that money back.

So you will be doing well to get 10% return, but could almost guarantee 5-6%. Maybe 7-8% would be a realistic figure to put into the retirement calculator.

The retirement calculator is just some software set up to make a calculation after you enter some figures. As I said earlier, the retirement calculator needs:

Required income

Inflation

Expected return

And of course, how long till you retire.

Here are some results from a retirement calculator:

Required income: $30,000 per annum

Years till retirement: 15 years

Annual inflation: 2.5% (unrealistic)

Annual yield: 5%

Income needed in 15 years: $43,448

Required value of retirement plan in 15 years: $825,000

Quite a lot of money for a modest retirement income. Here’s another one:

Required income: $30,000 per annum

Years till retirement: 20 years

Annual inflation: 5%

Annual yield: 8%

Required value of retirement plan in 20 years: $987,573

If you want an income of $45,000 when you retire – equivalent to less than $30,000 today – you will need: $148,000.

When you use a retirement calculator, make sure you use one that does calculate the income you will get at retirement adjusted for inflation – over 20 years, you will need 50% more than think you need today. If you do this, then you will benefit form using a retirement calculator.



Eric

Andy Rogers asked:


my colleagues realized how important was retirement planning when they themselves got retired, did they understand my wisdom. People would be idiots to not plan it earlier. It may seem tough at first to believe that one has to retire someday from the workplace and the sooner it is done the better it is for the life after retirement. Retirement planning is essential in order to be able to enjoy retirement. Most people have dreams for their retirement years and only planning will make it happen. The best time to begin retirement planning is as soon as a person has graduated from college and begins to work. Those people who begin early will find that their retirement years will be filled with the ability to do whatever they want or dream up.

Some people who don’t plan properly find retirement to be a night mare. But there are actually some good ideas to help plan for retirement. A great idea is to reserve a convenient optimum percentage of pay and place it in an investment account. Doing it this way means that the money isn’t missed and doesn’t become part of the monthly budget. Don’t expect that if the money isn’t taken out automatically that a person will have enough will power to do it on their own. Retirement planning isn’t easy and it takes determination and discipline to keep the plan together for years.

Taking advice form a retirement advisor is a good idea. He can make suggestions and advise of several significant things like opportunities to increase investments. As a person gets increases in salary or pay, keep the percentage of ten percent going to retirement planning. In doing this the person might also have the opportunity to possibly have early retirement. By retiring early a person will be able to spend more time doing all the things they have dreamed of. It doesn’t mean that life stops. Because of all these reasons, retirement planning is essential for later on in life.In the same way that as a child one learns how the ants and birds work hard for the winter to come, it is important to have instilled inside a person a good work ethic.

Prior planning is going to have long term benefits. It feels so good after retirement when you see the fruits of your planning endeavors ripe. A person will be glad that they spent the time doing retirement planning. They will be proud of the fact that they had self discipline to keep it up over the years. For those people not at retirement age it’s never too late to start preparing and if one sticks with the plan, retirement can still be filled with the opportunities to fulfill dreams someday.Retirement planning should never feel like a chore because it is a means to have a great time in the golden years of life.



Sandra

The Chef- Dishin Out the Answers asked:


Sorry, might be a stupid question, but I’m 17, and don’t know anything about that. I know that you can put part of your retirement investments into more risky funds, but isn’t some of it (probably most of it), put somewhere where you WILL make money, since lots of people cannot take a risk with that type of thing???
Please elaborate!!!
Thank you!

Christian

Bob Bencivenga asked:


Nowadays, individuals are healthier and having lengthier, fuller lives that are a great deal different from previous generations. Increasing numbers of individuals are establishing a fulfilling retirement that works for them.

With fears of social security collapsing, and increases in day to day expenses, it seems right that a growing number of individuals are re-characterizing what a good retirement means. And it has become accepted that to age properly, you need to remain energetic in old age – connected and involved.

You could consider moving to a new line of work, working for yourself, picking up new skills, working for the community, and realizing aspirations you’ve had to put in cold storage. These are the things that define a good retirement these days. How will you select what kind of retirement is right for you

We’ve listed 7 steps to establishing a good retirement in which you can realize fulfillment:

1. Set aside some time for thought. The majority of people start contemplating retirement when they cross 50, some people start prior to that. A few commence mulling about retirement the instant they leave a job they’ve held for the last 30 years.

2. Look to your past. Consider all your previous jobs. Which ones did you love? What parts of all your posts were the best? Is there a shared theme? Deliberate on the hopes and aspirations you held when you were younger that could have been disregarded. Is there a way to satisfy them currently?

3. Figure out your finances. Previously you could have concentrated exclusively on investment, now the hour has come to create a good retirement. Reflect on the income your funds will continue to produce. Do you hold a pension you can bank on? Do you get any retirement payments, for instance a pension? Will you receive Social Security? Do you possess retirement health care coverage?

4. Depending on your financial concerns, decide how much you will need to receive during retirement, a part-time or full-time job or perhaps you may not have to be employed in any way. Human life spans have grown, and with this you have the necessity for more money. It’s best to err on the side of caution and have extra for unanticipated situations. Having a job, even part-time, can significantly protect your money and boost your quality of life.

5. Reflect on the way you use your money in your free time. What do you like to do? Is it to possible to merge those pursuits with work? If you love food, perchance it’s time to start a café? If you spend all day immersed in books, would work in a library be the right thing?

6. After you’ve decided the level of work and leisure you’ll need to establish a good retirement, then you can look for a job. Productive senior employees by 2010 will be very valued.

7. Go back to college. Several colleges oblige retirement age students, by offering night classes, or offering credits for work experience. These might be the years for a new career.

A good retirement that is fulfilling has changed from an indolent weekend to one of the most thrilling periods in a person’s life. With the correct planned retirement, the potential is enormous. All the best creating a good retirement!

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Eleanor

poet1b asked:


Right now, boomers are preparing for retirement. Most are earning in their peak years or near their peak income levels. They are pumping more money than ever into the market to pay for their retirements.

The ratio of people pulling money out of the market to fund their retirements in comparison with the people putting money into the market to save for their future retirements is better than it will be for at least the next three generations, most likely more.

In the next five to fifteen years, the ratio of people paying into the market to save for their retirements in comparison to the people taking out of the market to pay for their retirements is going to change drastically. The draw on the market will increases drastically over the savings rate to finance retirement. This will be a historical first for the stock market.

Randy