Retirement income calculator
Retirement planning is an essential step in a person’s overall financial picture. This pre-retirement calculator will help you determine how well you have prepared and what you can do to improve your retirement outlook.
How to calculate your retirement age
The ideal age for retirement is different for everyone, but factors to consider include your:
- Retirement goals
- Current financial situation
- Estimated retirement expenses
- Retirement savings target
Retirement planning can be a complex process, but a wealth advisor can provide personalized advice based on your specific circumstances and goals.
Follow these steps to calculate your retirement:
- Enter your current age, annual income, retirement savings balance and applicable spouse information—this will provide an idea of where you stand financially today.
- To determine how much money you’ll need when you retire, enter your desired retirement age and the number of years you expect to draw on your retirement income.
- Modify assumption information if needed. These fields are already filled out based on historical data but can be adjusted as needed.
- Complete the Social Security information fields, if applicable. Otherwise, select No in the Include Social Security (SS) benefits field.
- Click the Calculate button to see your results. You can then select Detailed Results for a more in-depth look.
How much should you save for retirement?
The retirement planning calculator will give you an idea of how much of your yearly income you may need to save. While there is no one-size-fits-all answer for how much money you should save for retirement, these guidelines can provide a good starting point:
Expenses estimation
Estimate your retirement expenses by considering factors such as housing, healthcare, daily living costs, travel and hobbies. Remember that some expenses—like commuting costs—may decrease, while others—like healthcare—may increase. Creating a detailed retirement budget can help you determine how much money you’ll need.
Retirement duration
Consider your life expectancy and retirement duration. People are living longer, so consider planning for a longer retirement period. You’ll need to ensure your savings last throughout your retirement.
Retirement savings milestones
While individual circumstances will vary, there are general savings milestones to consider. By the time you reach your mid-30s, try to have saved the equivalent of your annual salary. By your early 40s, strive for three times your yearly salary. By your 50s, aim for six times your annual salary.
Employer benefits and Social Security
Consider employer benefits, such as pensions or matching contributions to retirement accounts. You should also consider your potential Social Security benefits, which can contribute to your retirement income.
The 70% rule for retirement
Many financial professionals suggest replacing 70% of your pre-retirement income. For example, if you earn $100,000 per year before retirement, you should work towards an annual retirement income of $70,000.
When should I retire?
The normal retirement age is between 65 and 67 years. However, some people retire earlier or later based on their financial readiness, specific needs and long-term retirement goals. When determining your retirement age, consider your circumstances, financial situation and personal goals. The retirement calculator can help by providing you with an idea of how much money you’ll have by a certain age.
When to start saving for retirement
You should start saving for retirement as early as possible. When you start early, your money has more time to grow. It also means you have more time to save, so you can put away smaller amounts each month and still end up with a good amount for retirement. The retirement income calculator will give you an idea of how much of your yearly income you should start saving now.
How much can you withdraw after retirement?
The required minimum distribution (RMD) rule mandates withdrawals from certain retirement accounts starting at around age 72. The specific amount you need to withdraw is based on your account balance and life expectancy. Aside from RMDs, the actual withdrawal amount is flexible and should be based on your expenses and tax considerations.
Retirement fund sources
Consider which of these common sources you can use to create a savings strategy that will meet your retirement goals.
- Employer-sponsored retirement plans such as a 401(k) or 403(b)
- Individual retirement accounts (IRAs)
- Social Security
- Pensions
- Personal savings and investments
- Real estate and rental income
Impact of inflation on retirement savings
Inflation causes goods and services to become more expensive over time. This can decrease the value of your retirement savings and make it harder to afford things when it’s time to retire. To lessen the impact of inflation, save and invest in ways that can help your money grow faster than the cost of living. This may include investing in stocks and real estate with the potential for higher returns.
The retirement income calculator includes expected inflation rates based on historical data for more accurate results.
Contact a wealth advisor for better planning
After using the retirement investment calculator, meet with a Mountain America Investment Services wealth advisor to start yourself on the path to a comfortable, relaxing retirement. To schedule a free, no-obligation consultation with the wealth management team, simply call 1-800-540-7670 or click the link below.
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