The Retirement Calculator

Using a retirement calculator is a great way to get a quick idea of where you stand financially with your retirement. They are not necessarily the be all end all tool in retirement planning, but they can show you if you could possibly fall short in retirement. And that's a good starting point!

In the future we hope to be able to offer a calculator that is much more comprehensive and takes into consideration salary raises, increase in health care costs, and social security income. For now, please use this simple, but effective retirement calculator to get an idea of where you stand.

Tips:

1. Remember that 'Available Equity' is what you currently have saved for retirement.
2. 'Extra Yearly Equity' is what you plan on putting away each year until you retire. If you invest in an employer-sponsored plan, be sure to include what your employer will contribute to your account as well - not just your own contributions.
3. The amount you put for your annual interest will depend on how aggressively you are invested. The stock market as a whole has returned slightly over 10% over the last 80 or so years. You could reasonably expect that long-term returns for stock investments to be between 8-10%. Any more than that is possibly unrealistic.
4. If you have a heavy bond concentration in your portfolio, you would probably need to select anywhere from 5%-8% annual return. And if you are invested even more conservatively, say in money markets, you will probably give yourself 3%-5% annual return.
5. You're wise to keep the inflation figure at 3% since that is, historically speaking, the average annual inflation increase.

So where do you stand? Are you pleasantly or unpleasantly surprised? Use this new-found information to get the ball rolling and make some changes if necessary. Do you need to save more, or invest differently in order to achieve the number you're looking for?

Get moving!

Retirement Calculator from the EBSA

Are you within 10-15 years from retirement?

If so, then there is a more detailed and incredibly comprehensive retirement calculator that you can use. This one is from the EBSA (Employee Benefits Security Administration) which is an arm of the DOL (Department of Labor). I discuss this calculator in more detail on my blog, so please be sure to read my post for more information. Otherwise you can simply go to the DOL website and start working on the retirement calculator right now.

Set aside some time so you can read the guide that goes along with it which will supplement the calculator. This will help you understand why the information the calculator requests from you is important. You will also learn plenty about retirement as well!

As we come across more useful retirement planning tools we will add them to the site as well. If you have suggestions of ones that you like to use and think others would benefit from them, please let us know.