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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 dependant on the type
of investments you select. From January 1970 to
December 2006, the average compounded rate of
return for the S&P 500, including reinvestment
of dividends, was approximately 11.5% per year
(source:
www.standardandpoors.com ). During this
period, the highest 12-month return was 61%, and
the lowest was -39%. Savings accounts at a bank
pay as little as 1% or less.
It is important to remember that future rates
of return can't be predicted with certainty and
that investments that pay higher rates of return
are 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 additional sales charges and fees that
funds 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
dependant on the type of investments you select.
From January 1970 to December 2006, the average
compounded rate of return for the S&P 500,
including reinvestment of dividends, was
approximately 11.5% per year (source:
www.standardandpoors.com ). During this
period, the highest 12-month return was 61%, and
the lowest was -39%. Savings accounts at a bank
pay as little as 1% or less.
It is important to remember that future rates
of return can't be predicted with certainty and
that investments that pay higher rates of return
are 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 additional sales charges and fees that
funds 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), which has a
long-term average of 3.1% annually, from 1925
through 2006.
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
can automatically increase 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 2007 FICA income
limit of $97,500 with an annual maximum Social
Security benefit of $25,392 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. |
