Here are the steps to use our Retirement Savings Calculator effectively:
- Input Your Current Age
This allows the calculator to determine how many years you have until retirement. - Input Your Desired Retirement Age
This is the age when you plan to retire and start withdrawing from your savings. - Enter Your Current Retirement Savings Balance
This includes the total amount you’ve already saved across 401(k), IRAs, etc. - Enter Your Annual Contribution
This is how much you plan to contribute each year going forward until retirement. - Estimate Your Annual Rate of Return
A reasonable assumption is around 5-7% based on a diversified investment portfolio. - Account for Existing Non-Retirement Income Sources
Include annual income you expect from sources like Social Security, pensions, etc. - Enter Your Desired Annual Retirement Income Need
A common target is 70-80% of your pre-retirement annual income. - Consider Adjusting for Inflation
Most calculators have a built-in inflation rate, usually 2-3% per year.
The calculator will then estimate your projected retirement savings balance at retirement based on the inputs provided. It will also show if you are on track to reach your desired annual income or if you have a shortfall.
- Try Different Scenarios
Adjust your contribution rate, expected returns, retirement age to see impacts. This helps determine what changes get you closer to your goal.
The more accurate your estimates of income needs, existing resources and growth rates, the better prepared you can be for retirement. Revisit and update the calculator annually.
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