Retirement Calculator - Calculatorall.com
This retirement calculator is a great resource to use for financial planning of your retirement. You can use each of the calculator options separately for performing some simple calculations quickly or you can use them together for coming up with a more comprehensive retirement plan for yourself. The retirement calculator can be used for comparing correlation between lifespan of the funds as well as what you can withdraw each month.
How Much can You Withdraw After Retirement?
How Long Your Money Can Last?
How to Save for Your Retirement?
What Is Meant By Retirement?
Retirement simply refers to withdrawing yourself from an active work life and, once retired, most of the retirees never work again for their remaining lifetime. The concept of retirement, however, can differ from one person to another. When it comes to the retirement age, one can retire during any working year of their adulthood. In fact, you can even opt for a 'semi-retirement' by decreasing your working hours gradually as you approach your retirement. One can even announce their retirement for a short-term and then rejoin their workforce again just because they despise too much on their retired life. Whatever option you choose, retirement can be a very significant consideration and planning well for it is always necessary. Generally, people retire between 55 to 70 years of age. And, if the retirement is not forceful, most of the people retire whenever they find it comfortable and are ready to make the big call.
Your financials are definitely a major factor when it comes to deciding when you're going to retire. Even though you can retire anytime whether you have saved anything for your retired life or not as you can rely on your Social Security and side incomes, it may not be a great idea. The simple reason is that there is huge difference in having regular working income and no or very little income. When you plan for your retirement, you must save enough amount of money in your working years for having a comfortable living after retirement. You might ask how much you should be saving for retirement while you're still working. Well, generally, experts recommend that it should be anywhere between 10-15 percent your pretax income. You can also use the retirement calculator for determining how much money in your retirement fund would last for how long.
Where Your Retirement Funds Can Commonly Come From?
There are some common sources of financial support that people often rely on for their retirement income. Let's take a look at these.
. Social Security
A recent study revealed that 35 percent adults in United States have under $1000 in their savings while 34 percent adults have no savings at all. Considering this information, any American adults falling in these savings groups won't have much for conventional retirement which means they will have to rely on social security payments after they retire.
What you get in social security benefits after retirement, basically, depends on what you have earned in the past. For instance, if your monthly earning was $700 then your benefit after retirement will be $630. Increasing the income by 400 percent will yield 156 percent increase in the benefit amount. However, if you will double your income again, your benefit will see only 50 percent increase. This means that those who earn low incomes have greater gains in their initial social security investments as compared to those who earn higher incomes.
. Pension Plans
They are the retirement funds pooled together by the employers for their employees till their retirement. Once retired, the employees can be able to choose between fixed payouts or giving the lump sum amount to insurance companies. The incomes can then be distributed into cash flows till their death just like annuities. The pension plans can be divided further into two types i.e. defined benefit plans and defined contribution plans. Generally, pension plans refer to defined benefit plans, however.
These plans used to be a retirement savings trend in olden times but the trend has declined owing to the fact that these plans let people to transition companies without having to forfeit many benefits. But these plans still exist in public sector as well as traditional corporations which have low turnover rates and employee loyalty is high.
Where Your Retirement Funds Can Commonly Come From?
There are some common sources of financial support that people often rely on for their retirement income. Let's take a look at these.
. Social Security
A recent study revealed that 35 percent adults in United States have under $1000 in their savings while 34 percent adults have no savings at all. Considering this information, any American adults falling in these savings groups won't have much for conventional retirement which means they will have to rely on social security payments after they retire.
What you get in social security benefits after retirement, basically, depends on what you have earned in the past. For instance, if your monthly earning was $700 then your benefit after retirement will be $630. Increasing the income by 400 percent will yield 156 percent increase in the benefit amount. However, if you will double your income again, your benefit will see only 50 percent increase. This means that those who earn low incomes have greater gains in their initial social security investments as compared to those who earn higher incomes.
. Pension Plans
They are the retirement funds pooled together by the employers for their employees till their retirement. Once retired, the employees can be able to choose between fixed payouts or giving the lump sum amount to insurance companies. The incomes can then be distributed into cash flows till their death just like annuities. The pension plans can be divided further into two types i.e. defined benefit plans and defined contribution plans. Generally, pension plans refer to defined benefit plans, however.
These plans used to be a retirement savings trend in olden times but the trend has declined owing to the fact that these plans let people to transition companies without having to forfeit many benefits. But these plans still exist in public sector as well as traditional corporations which have low turnover rates and employee loyalty is high.
. 401(k), 403(b) and 457 Plans
Among the popular retirement saving plans in the US, there are Employer Matching Programs like 401(k) and 403(b). The employers ‘match’ dollar for dollar against the contribution of their employees into these plans. There is a certain percentage limit that differs between 401(k) plans offered through various organizations. Just a small proportion of companies offering 401(k)s do not make employer contributions. The percentage matches, however, remain between 1 to 6 percent of the salary. There are some who take the dollar-to-dollar matching approach up to specific percentages, and then match lower amount until another specific percentage is reached. Such employer contributions allow the Employer Matching Programs to offer greater bang against every buck that is invested in comparison to any other saving option for retirement.
Besides, these contributions are usually made with the pre-tax dollars. Essentially, the funds are allowed to grow tax-free till the time they are distributed. The taxes are applied only on the distributions just like ordinary income after your retirement.
What Is Meant By Retirement?
The conventional IRAs as well as Roth IRAs are amongst the popular retirement savings options as well. Quite similar to the 401(k)s or any other Employer Matching Program, they're covered with particular tax shields to make both these options quite appealing. The annual limits for the contribution amounts tend to be smaller, however. What sets these conventional IRAs apart from Roth IRAs normally is the tax applied on each of them. Conventional IRA's contributions normally go in the pre-tax and are taken from your gross pay but are taxed at the time of withdrawal. On the contrary, the contributions in Roth IRAs use after-tax dollars at the time of deposit, and aren’t taxed at the time of withdrawal in retirement.
Personal Savings
Another option one can rely on in their retirement is their personal savings. However, they really need to use a retirement calculator here in order to find out what exactly they'll need and how longer their savings will last in retirement. A major reason behind underestimations is that people forget accounting for inflation impacts. In modern times, inflation tends to be comparatively lower in the developed countries but the effects can be observed when you talk of it in the long run. Just talk about some senior citizens about the prices of fuel when in their prime time compared to what they are now - the difference that you will find out in the prices is caused by inflation. When you save for retirement with your personal saving options like cash, savings accounts, checking accounts, or other liquid assets, there is no or very little interest earnings as compared to investments you have made in the retirement plans that are created intentionally for growing over the decades.
This doesn't mean, however, that keeping your retirement savings readily available doesn't have any benefits. Emergency funds can be considered among the most significant aspects of great savings plans. They won't just be available at the time of retirement but you can also use them for any emergencies as they pop up. Job losses, medical conditions, and any kind of financial surprise can be easily tackled with the help of emergency funds. However, it is still advisable that you use a retirement calculator for determining how long your savings will last after your retirement so that you can plan your savings accordingly.
What Other Retirement Income Sources Are Available?
Besides the ones mentioned above, there can be several other sources from where your retirement income can come. Let's take a look.
. Real Estate And Home Equity
In some scenarios, one can also choose to liquidate their real estate ownership to get the income during their retirement. It is common for people to own one house at least and that goes for retirees as well. Their hard-built equity can be 'reverse-mortgaged' so that they can use it as a source of steady income. Reverse-mortgaging, as the name suggests, refers to reversing of mortgages where the home's ownership is eventually transferred to someone who buys that reverse mortgage. What’s interesting is that they’re paying retirees for living in their houses till the ownership is transferred finally.
. Passive Income
There can be different passive income sources that you can rely on in your retirement including rental properties, stock dividends, royalties, etc. In addition, only because there are no tax benefits of other investments you shouldn't rule them out. When the IRA and 401(k) contributions reach their limits, the investments that are passively-held give you another avenue for placing any of your remaining money.
. Annuities
Another option would be to get your retirement income through annuities. These are actually fixed cash flow amounts that are typically distributed for all your remaining life. Two kinds of annuities exist today i.e. immediate annuities and deferred annuities. The former requires the payment of upfront premiums and the payments are released from principal beginning even from next month. The deferred annuities, on the other hand, are built with the passage of time until a particular sum turns into your income stream. When it comes to retirement, both the options have their particular uses.
. Inheritance
Large inheritances coming from the family members can also be your source of retirement income.
However, regardless of what your source of retirement income is, you should still rely on a good retirement calculator for planning your retirement savings.
How This Retirement Calculator Works?
This retirement calculator, basically, features three different calculators and each of them has its own specific purpose. The first one tells you how much you can be able to withdraw after your retirement based on a given set of information that you have to provide as input to the calculator. This calculator requires you to enter your age, expected age of retirement, life expectancy, your current retirement savings, annual or monthly contributions that you'll be making to your retirement account, average return on investment and the annual inflation rate. Just hit the calculate button after providing all the required input values and the calculator will tell you the balance in your retirement account at your retirement age and its equivalent purchasing power today. It also gives you the monthly amounts that you can withdraw from your age of retirement until the age you have entered in your expected life field. The current buying power at retirement age and at expected life is also specified. The second one on this retirement calculator can be used for determining how long will your funds last. The calculator requires you to enter the total amount you have, the amount you want to withdraw each month and average return on your investment. With these simple input values, the calculator will give you the numbers for the years for which your funds are going to last if you withdraw the specified amount each month.
Besides, it shows you a table with different withdrawal plans for your retirement funds. Each plan has a specific withdraw length like 5 years, 10 years, and 15 years up to 35 years. In front of each you get the amount you can withdraw per month if you want to use your funds for that particular number of years. It's a perfect retirement calculator for planning the use of your retirement funds.
Finally, the last calculator can be used for determining how much you should be saving every month or every year until your retirement for having enough in your account for your life after retirement. This calculator requires you to enter your current age, the age of your retirement as you plan, the amount that you'd want to have in your account when you retire, any current retirement savings that you may have, and the average return on investment. After entering all these values, just hit the calculate button and this retirement calculator will tell you what you should be saving every month until your retirement age, what would be your principal and how much interest you'll earn. The same numbers are also provided for yearly saving plans if you want to pursue that. The calculator will tell you how much you should be saving every year. Besides, the calculator also tells you any additional amount that you'd need in your savings account as well and total principal and interest amounts are shown for this too.
So, use this retirement calculator for better planning of your retirement funds. It will help you to have enough in your retirement account when you retire. And, if you want to live a graceful life even after your retirement, you must plan your savings according to the suggestions you get by this retirement calculator. You'll definitely commend this decision of yours in your life after retirement.