Retirement PlannerDo you know what it takes to work towards a secure retirement? Use this calculator to help you create your retirement plan. View your retirement savings balance and your withdrawals for each year until the end of your retirement. Social security is calculated on a sliding scale based on your income. Including a non-working spouse in your plan increases your social security benefits up to, but not over, the maximum.
Definitions
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.
For example, from December 2000 to December 2010, the
annual compounded rate of return for the S&P 500 was
0.899%, including reinvestment of dividends. From
January 1970 to December 2010, the average annual
compounded rate of return for the S&P 500, including
reinvestment of dividends, was approximately 10.05%
(source: www.standardandpoors.com). Since 1970, the
highest 12-month return was 61% (June 1982 through June
1983). The lowest 12-month return was -43% (March 2008
to March 2009). 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.
For example, from December 2000 to December 2010, the
annual compounded rate of return for the S&P 500 was
0.899%, including reinvestment of dividends. From
January 1970 to December 2010, the average annual
compounded rate of return for the S&P 500, including
reinvestment of dividends, was approximately 10.05%
(source: www.standardandpoors.com). Since 1970, the
highest 12-month return was 61% (June 1982 through June
1983). The lowest 12-month return was -43% (March 2008
to March 2009). 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). The CPI for 2010 was 2.4%,
as reported by the Minneapolis Federal Reserve. From
1925 through 2010 the CPI has long-term average of 3.1%
annually. Over the last 30 years highest CPI recorded
was 13.5% in 1980.
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 2011 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 birth date). Your actual
benefit may be lower or higher depending on your work
history and the complete compensation rules used by
Social Security.
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