Retirement Savings/Withdrawal Calculator
- Subtract any other income (in today's $ - Social Security, annuity, pension etc..) that you'll receive from the amount on which you'll need to live.
- The amount that you need to live on should include taxes.
- Withdrawals are made at the beginning of the year.
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- Joe and Sue are going to retire in 5 years. They've been saving for years and will have accumulated $1.2 million dollars by the time they retire. They can earn appoximately 8% per year by investing in the stock and bond markets. Now they want to know how much they can withdraw each year in retirement.
Using the calculator, enter:
- Using the example above... Sue says their annual income is about $45,000.00 now. They both think that $59,186.81 is way too much. Maybe they can retire earlier? They'd like to see how much $ they'll need if they retire in 2 years. Here's what to do -
- change the years until retirement to 2
- leave the Number of Years in Retirement at 35
- leave the Annual Interest Rate earned field at 8 (compounded Annually)
- leave the Annual Inflation Rate field at 3
- change the annual living expense to 45,000
- leave the total amount they have field blank.
- Press the Total button. It will show they need $834,943.68 when they retire. They'll have that, so all is well!!
- Now press the View Schedule button.
In 2 years they'll be able to spend $47,740.50 and that amount will increase each year by 3%. YEAH!!!
So they decide to retire in 2 years.
When you find out how much you'll need to save for retirement, use my Savings Calculator to see how to get it.
On the Savings Calculator you will enter:
- The $ amount needed at retirement in the Future Value box.
- How much you've already saved in the Present Value box
- The number of years until you retire in the Number of Years box
- ...and the annual rate that you think you can earn in the Rate box
- Press the Contribution button and it will tell you how much you need to invest each period (weekly, biweekly, monthly, quarterly, semi-annually or annually depending on which is selected). You can change the period by selecting another period and pressing the Contribution button again.
- No need to adjust that value for inflation, this Retirement Calculator has already done that for you.
Be sure to review your plan periodically or as requirements change!