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

chilliemurphy asked:


I have been working for almost 10 years and have been building my 401K since I started right out of college – now, I want to go back to graduate school, but I don’t know if I’ll be able to get any financial aid or favorably-priced student loans if I have retirement assets. Am I required to dip into this money as a first-dollar plan, or can I keep my retirement assets intact & still get financial assistance (even a Stafford loan)? Thanks!

Robert

Martin Reed asked:


As women, we have many different roles that we take on throughout the years. We are daughters, wives, housekeepers, mothers, employees, volunteers and so much more. With all of this activity, hustle and bustle, thinking about the day when we will retire always seems like it is a long way off. It can be difficult to put effort into saving for something that seems such a distant idea. However, planning and preparing for retirement is one of the most important things that we can do for ourselves.

The most important thing to remember when preparing for retirement is that your income will end, but your bills will keep coming in. There will be some decreases in spending, due to the fact that you no longer need to commute and spend money on other work related expenses, but your cost of living will likely remain the same or even increase as you will be spending more time at home. You need to be sure that you have enough funding to take care of these expenses for many years to come.

There are several different options available when it is time to begin saving for retirement, each with its own set of rules and regulations. Be sure to understand the ins and outs of the types of retirement savings plans you are investigating before making a final decision. Some of the most popular options for retirement funding include:

Social Security – In the US, Social Security payments are about 40 percent of the monthly earnings of a retiree. While this free money is a wonderful asset to your retirement budget, it is far from enough to allow those who have left the workforce to live comfortably. You can certainly budget Social Security payments into your retirement plan, but know that there is more that needs to be done.

Profit Sharing and Pension – Some employers offer profit sharing and pension plans to their employees. These are usually company allocated funds that are invested on behalf of the employee and are paid out upon your leaving the company. There are often penalties involved if you leave an employer before retirement. If your company offers one of these plans, be sure to educate yourself on the regulations and rules that govern the policy. Be sure to keep track of the amount that is in your account each year and review what your future additional needs might be.

401(k) Plans – 401(k) plans are very popular retirement savings plans that are offered through employers. When these are offered through an employer, often employee contributions to the fund are matched by the company, up to a certain percentage of weekly or monthly income. In this case, you may want to elect to have a higher amount held from your checks to get the most from your money when it is time to cash out your account. As with a profit sharing or pension plan, usually you must have a certain number of years at a company for your account to be fully vested.

Individual Retirement Accounts – If you are not able to start a retirement funding plan through your employer or the plans that are offered to you are simply not enough for you to retire comfortably when you want to, consider an individual retirement account or IRA. Certain types of retirement accounts offer tax incentives to those investing up to a certain amount of money each year. Remember that these are investment accounts, the amount they will be worth will vary depending on what you add to the account and how long you keep the money invested.

Making the crucial decisions that are necessary to ensure that your future will be safe and comfortable can be difficult. You may want to seek the help of a professional retirement investment specialist. They will be able to look at your current lifestyle and income, find out about what you would like to be able to accomplish in retirement and help you to develop a retirement savings strategy that will be affordable for you and will create a pleasant retirement environment for you later.

Even when retirement is decades away, beginning to prepare for retirement as early as possible will make things less financially stressful for you down the road. Create an affordable retirement plan as soon as possible and you can be certain that your golden years are spent enjoying yourself, rather than worrying over how the bills are being paid each month. With careful planning and investment help, if necessary, you can ensure that you have a pleasant retirement without financial stress or worry.



Arthur

small_business_CEO asked:


I’m a small business owner (4 full time employees) who does not offer any retirement plan or have one for myself. My employees are commission based only. What would be the best retirement plan for me and for all of us, individually? Thanks!

Herman

Elijah James asked:


You are middle aged, and retirement seems far away for the moment, but in this current economical crisis, will there be a future for your retirement?  This and other concerns are starting to settle in the minds of middle-aged Americans today.  With Social Security in the balance, banks being closed, and people losing their 401K accounts, it’s time to start looking much deeper ahead than we first realized.  Using a Basic Retirement Calculator can give an idea of what you need to do today for a comfortable retirement tomorrow.

Living on a budget is what many Americans have to endure these days.  Prices are going up on the staple of existence.  Food, mortgages, and gasoline have all hit high marks, with no indication that it will get better.  Businesses are closing down, and many people who thought they were secure are now losing their homes and pensions.  Frightening as this all sounds, there is a way to secure at least enough funds to get us through our retirement years.

The next step is to use the basic retirement calculator for what is needed now for retirement later.  There is a simple method of calculating a goal and current income.  For example, if you would like to have at least a $45,000 annual retirement income, and you project no house payments by that time, then you have to look at your present income, monthly contributions, payments and tax for the projected retirement age.  If you already have IRA or 401K accounts that are secure, then you will have even more monthly payments upon retirement.  Savings and brokerages are also put into the calculation under current retirement assets.  Any accounts that are tax-advantaged give much needed leverage when considering retirement income.

Consider any pensions and, of course, Social Security payments that will be given at retirement age.  Expected inflation during retirement is another issue to consider.  Projecting this number from historical rate increases gives an idea for the future, but not completely reliable.  Calculating your current retirement assets can give an idea of what you will have after retirement from your accounts.  A rate of return for any of your portfolios that are high risk/high return can be toned down once retirement is on the horizon.  That way you have them to draw on when needed without fear of loss.

Sale of real estate or any other one-time income should also be entered into the basic retirement calculator.  This will affect your monthly amount, but could also lend a hand as being a much-needed emergency nest egg.  An after retirement job may be necessary to supplement your income, and many retirees choose to work after retirement as a rewarding experience anyway.

Looking to the future is important if you need to be secure in your retirement.  What happens today will reflect on your quality of life tomorrow.  A Basic Retirement Calculator online can help you see immediately what you need to do to have a comfortable retirement.



Christopher

Mario Carini asked:


rse we know that saving for retirement is important. But with day-to-day expenses it’s difficult to get down and plan for the golden years. When 65 rolls around, most people are ill prepared to meet the financial requirements of retirement.

A report issued by the National Summit on Retirement Savings in June of 1998 says: “Americans must save more today if they are to realize the dream of a financially secure retirement tomorrow.” Section two of the report says: “Many Americans are not planning or saving enough to be able to afford to retire.”

Two major problems that were outlined at the conference was the need to educate the public about the necessity of saving and the related confusion about how to go about it. As old age approaches, many people become increasingly suspicious of anything and everything that they might consider as a scam. As you get older, it’s harder to salt away enough to last you through your retirement years. And even more difficult when the economy is on a shaky footing.

With the rising cost of living, taxes, mortgages, credit card debt and low wages, the average American has very little incentive to save at all. Today’s financial worries take precedence over retirement financial stability. And to top this off, the income derived from pensions and social security benefits don’t meet the needs of a retirement lifestyle. Unfortunately, today’s recessionary times have eaten away life savings and investments.

Some people have taken steps to plan ahead. While IRA’s, RRSP’s, 401K are useful avenues to salt away some income for an uncertain future, no one can totally rely on the money from these sources to insure retirement will be a comfortable one. Investments in stocks, bonds, Mutual funds and real estate do help add money to the retirement pool, but this assumes you know something about investing in these avenues and in the current financial climate, the chance of making any money at all is risky.

One of the best methods to plan for retirement is not to retire at all! While retirement may be the best time for leisure and luxury, eventually life gets boring with so much unproductive time on your hands. That’s where running your own business comes in.

While you’re still working a job, you should be looking ahead to what it is you like to do and see how you can turn that hobby, talent and skill to good use.

You don’t need to grow your retirement business into a multi-national corporation. All it needs to do is give you something that excites you and motivates you to get out of bed every morning.

Retirement should be an exciting time in your life and requires as much planning and foresight that it does in planning a wedding or travel to an exotic location. In today’s environment, a working retirement is the best way to produce a modest income, yet still have the time to enjoy what life can bring. It insures that no matter what the climate is, you will stay comfortable with something to fall back on when things get rough.

And the best way is to start while you’re still working. So take a close look at what you’d like to do during your retirement years and ask advisers on how you can start. There are hundreds of businesses on the Internet, many of which can produce a good income. Whether you like to sell or produce something like ebooks and software, there’s a good chance you’ll be able to sell it.

Your current retirement savings won’t be enough when you reach 65 so plan now to insure you will have some added income.

Kristin

Elijah James asked:


Most people don’t think about how much money they need to save for retirement until they really need it. After all, with the pressures of daily life taking up most of our awareness, who has time to think about it?

The truth is most people drastically underestimate just how much they’ll need to keep themselves going once they do retire from the workforce. What many people seem to forget when they try to work out the amount of money they might require is that the value of money changes over time.

This means that what looks like a really large sum of money to you now sitting in your retirement fund probably won’t buy the same amount of things once you do retire. If you’re close to retirement age already, then this argument won’t hold true for you. However for anyone that still has more than a decade left in the work force, you should consider the change in the value of the dollar as time goes by.

How Much Do I Need To Save For Retirement

Some financial advice firms estimate that you should consider perhaps 50% of your current income per year as a healthy start to give you an annual income figure after retirement. If you think about how much you earn right now, could you imagine living on half this amount for the entire duration of your retirement years?

Of course, you should figure that you won’t have the same types of expenses to pay for once you leave the work force, so your expenses in this area may be reduced. Unfortunately, you may also find that some of your medical bills may be increased as time goes on. This shift in the cost of living after retirement is often where people go wrong in their calculations.

The other issue you should consider is how long you expect to live once you have retired. Most people stop working at 65 but the average life expectancy is well over 80. That’s 15 years you’ll need to survive on only what you have in your retirement savings.

How Do I Increase The Amount of Retirement Savings I Have?

No matter how old you are or how close to retirement you are, there is always plenty of opportunity to increase the amount of savings you have. If you’re still working and earning income, then you can voluntarily increase the amount you contribute to your plan each pay period.

Compounding interest can have a dramatic effect in increasing your savings, so any amount you can put in will increase over time well past the amount you spent simply because interest accumulates on top of interest already paid.

If your retirement is still a long way off, then consider some very carefully chosen investment options to help increase the amount you have available for later years. As you get closer to retirement age the extent of your investment activity should be more conservative to maximize and retain the amount you already have.

So if you’re trying to calculate how much money you need to save for retirement, perhaps consider using an online retirement calculator to give you an estimate of how much you need so you can begin making plans now.



Susan

ali.mama asked:


I am a 28 year old stay at home mother, who is not married. I am concerned about what this is doing to my retirement savings. I want to know what my options are to be prepared for retirement.
I forgot to mention I do not receive any assistance (e.g. welfare). I do live with my boyfriend, who is my daughter’s father.

Rosemary

Bhumika Goel asked:


Whether we want to accept it or not, old age is a definite and leads to retirement from professional life. Thus, to have a comfortable and secure senior period, it is important to plan your post-retirement life prudently. Credit Union Retirement Planning gives you financial independence and a comfortable living standard even when you are no longer earning. With the help of a retirement calculator, we will help you to plan your retirement in a more effective manner.

With skyrocketing costs, it becomes difficult to keep your monthly budget intact. Even a well-salaried person may become off balance. With costs going up every day, you can imagine how high they will be when you are ready to retire. However, retirement planning provides you with a steady income every month to support you during times of rising costs. Retirement planning is a guarantee that you will continue to receive enough income to enjoy a comfortable lifestyle.

Planning for retirement is as important as planning your career or marriage. The future depends largely on the choices you make today. Correct and wise decisions with proper planning, taken at the right time, will promise many smiles at the time of retirement. Therefore, reach out to your retirement calculator and know your retirement needs.

To understand why a large number of people have already started planning for their retirement, and why you should also check your retirement investment calculators for perfect retirement planning.

Retirement is the ultimate reality that happens to every working person and we believe that it should be your best phase of life. Most young people today think of retirement as a distant reality. However, it is important to plan for your post-retirement life today if you really want to retain your financial independence and live a comfortable life. Retirement planning can be done anytime. It is never too late or too early to start saving for retirement with NMTW’s Traditional, Roth and SEP IRAs.  

With NMTW’s traditional and Roth IRA accounts, saving for retirement becomes even easier. You can have a regular amount deducted from your paycheck and directly invested into your account that can serve as your regular earning after retirement. Our traditional, Roth and SEP IRA accounts help young professionals to plan their life after retirement with feasibility. With such retirement planning, you will never feel a burden on your present life and can save a hefty amount for your life after 60.

Traditional IRA Account

With a traditional IRA, you may be able to deduct your annual contributions on your federal income tax return and your earnings are 100% free from federal income tax until you withdraw them from your account.

Roth IRA Account

With the Roth IRA, your contributions are not tax deductible now, but if you follow certain rules, your earnings will be tax free when you withdraw them.

Visit www.nmtw.org and know more about our different personalized retirement planning to make your future secure and independent.



Karl

Ramsay Mameesh asked:


There are three fundamental retirement planning questions, that are universal to everyone, no matter their age, income, or wealth. More than investments, asset allocation, or tax strategy, people want to know the answer to the following three questions:



When can I retire?

How much savings do I need for retirement?

How much can I spend in retirement?

The most important of the three questions, from a

retirement planning perspective, is the last one – How much can I spend in retirement?

How much can I spend in retirement?

How much you can spend in retirement, is based on how much you have saved for retirement, divided by an annual safe withdrawal rate of between 3% to 4.75% depending on your age at retirement.

A better, and the more important, question to ask is “How much do I need to spend in retirement?” To answer this question you will have to create a retirement budget.

Creating a retirement budget, insures that you will not run out of money during retirement, and it allows you to answer the other two retirement planning questions.

How much savings do I need for retirement?

How much savings you need for retirement, depends on how much you spend in retirement (your annual retirement budget), divided by an annual safe withdrawal rate of between 3% to 4.75% depending on your age at retirement.

The amount you need to save for retirement, is the amount of money you will need, to cover the cost of your retirement. The cost of your retirement is your retirement budget, which we calculated, when we answered the previous question – «how much can I spend in retirement?»

When can I retire?

When you can retire, is determined by when your savings can pay for your spending in retirement, based on your retirement budget. So, if your retirement budget is $3,000 per month, you currently have $600k, you need $900k to pay for your retirement, you save 25k per year, and your investments earn 10% compounded annually – you can retire in 3.5 years.

Did you notice, that the common thread in answering all three questions, was your retirement budget? That is because creating a retirement budget, your spending plan for retirement, is the key to calculating how much you will need for retirement, and to figure out when you can retire.



Glenda