A retirement calculator helps you figure out how much money you’ll need to retire comfortably. You can calculate how long it takes to save up enough money, whether Social Security alone will cover your expenses, and even see how much you could earn if you work part-time.
There are several different types of retirement calculators available online. Some are free; others cost $10-$20 per month. And some offer additional features like real-life scenarios or advice based on your age, gender, marital status, etc.
You can find retirement calculators on sites such as Bankrate, NerdWallet, GoBankRates, SmartAsset, and MoneyBlueBook.com.
Retirement and Investment Guidance
Your 401(k) and Individual Retirement Account (IRA) are great places to stash aside money for retirement. However, you don’t want to put too much into either one because you might miss out on matching contributions from employers. And while you could contribute up to $18,500 per year ($24,500 if you’re 50 or older), there’s no guarantee that you’ll receive the full amount.
Maxing out your match is critical to maximize your savings. If you max out your employer contribution, you’ll get the maximum possible match from your employer. For example, if you earn $50,000 annually and your employer matches half of what you contribute, then you’d save $25,000 in tax-deferred dollars. You wouldn’t have access to those funds unless you retire, though.
The final piece is how much it costs to invest. Depending on where you live, the fees associated with investing can add up quickly. A low-cost index fund, such as Vanguard Total Stock Market Index Fund Investor Shares (VGTSX), typically charges less than 0.5% per year. This is compared to actively managed mutual funds, which charge anywhere from 2% to 3%.
To help you decide whether to invest in stocks or bonds, we’ve included some information here.
Why would you use a retirement calculator?
A retirement calculator helps you figure how much money you’ll need to retire comfortably. But it doesn’t consider everything that could affect your retirement savings.
The average American couple needs about $1 million saved up over 40 years to cover living expenses during retirement.
But there are many things that can impact your ability to reach those goals. For example, inflation, taxes, health care costs, Social Security benefits, and even whether you work part-time or full-time.
To help you make sense of your options, we’ve put together this list of some common questions people ask us about retirement planning. We hope you find it useful.
What will I require in retirement?
Retirement planning is about what you plan to do with your money once you stop working. You might decide to travel around the world, spend time volunteering, enjoy hobbies, or even start a second career. But how much money do you need to live comfortably during retirement?
There are several different ways to figure out how much money you’ll need in retirement. One way is to use a financial calculator like Mint or Personal Capital. These tools help you estimate how much income you’ll receive each month based on your current spending habits. Then you can plug those numbers into calculators that predict future inflation rates and determine how much you’ll need to save each month to achieve your goals.
Another option is to work backwards. If you know how much you earn now, you can find online calculators that tell you how long it takes to reach various savings milestones. For example, one tool estimates that you could accumulate $1 million over 30 years if you saved 10% of your income every year.
Finally, there’s the old fashioned method of estimating how much you’ll need in retirement based on your life expectancy. To do this, you simply multiply your age by 25. So if you’re 65, you’d multiply 65 x 25 1625. This number represents the amount of money you’ll need to generate annually to maintain your standard of living.
Retirement Calculator Explained
How much money do I need to save for retirement? This question gets asked a lot. But there are actually multiple ways to answer it. Here’s why.
First, let’s talk about the most basic way to calculate how much money you’ll need to save for retirement: take your current salary and multiply it by 30. Then add another 10% (a number that varies depending on where you live). So, if you make $50k per year, you’d figure out how much you need to save by taking 50 times 30 plus 10%. And that’s a good rule of thumb.
But here’s the thing: if you plan to continue working during retirement, you might want to consider saving even more. After all, you’ll still need money to pay bills, cover living expenses, etc., while you’re retired. In fact, according to the Social Security Administration, the average person needs around 15% of his/her preretirement income saved up just to maintain a middle class standard of living. If you don’t count Social Security benefits, that number goes down to 12%.
So, if you plan to keep working during retirement, you could potentially need 20% of your current salary saved up. Of course, this calculation assumes you’ll earn the same amount throughout your career. If you think you’ll make less money later in life, you’ll likely need to save even more.
And finally, if you won’t be working during retirement, you’ll probably need less. Why? Because you’ll no longer have to worry about paying bills, covering living costs, etc. You’ll also be able to spend more time doing things you enjoy.
Now that we’ve talked about some of the factors that go into determining how much money you’ll ultimately need to save for retirement, let’s look at how much you’ll need to save based on different scenarios.
The chart above illustrates three different retirement savings goals. Each goal represents a different percentage of your annual income. For example, if you want to accumulate enough money to support yourself comfortably for 25 years, you’d need to set aside 3% ($3,500) of your yearly earnings.
Question #1: How much cash will I need when I retire?
If you’re planning on retiring early, it might be helpful to know how much money you’ll need to survive once you stop working. There are many factors involved in determining how much money you’ll require, including where you plan on living, what type of job you plan on taking, and even how long you plan on staying retired.
There are several different calculators out there that can help you figure out how much money you’ll be required to save each month in order to achieve financial independence. One such tool is called “How Much Money Do I Need To Retire Early Calculator.”
The site asks you some basic questions about your situation, including your age, current salary, number of children, marital status, and location. Once you’ve answered those questions, the tool will tell you how much money you’ll likely need to retire based on your answers.
You can use the calculator yourself to see how much money you’ll actually need to retire, or you can enter your information into the form and receive an estimate. Either way, the tool provides detailed instructions on how to calculate the amount of money you’ll need to save per month.
To find out how much money you need to save each month, head over to the link above.
Question #2: How much should I put up for my retirement?
The average person needs $1 million dollars to retire comfortably, according to the latest research from Bankrate.com. But how many people actually have that amount saved up? Not nearly enough, it seems. In fact, just one out of every 10 Americans has even half that sum stashed away. If you want to retire rich, you’re going to need to start saving now.
In addition to being able to live off your savings during retirement, having a large nest egg can help you avoid financial stress later in life. “If you don’t have that cushion, you’ll find yourself living paycheck to paycheck,” says Mark Kantrowitz, publisher of FinancingYourDegree.org. And while you might think that you could make ends meet on a small pension, studies show that most retirees end up needing to work well into their 70s — and some even longer.
So where does that leave us? Well, you’ve got options. You can invest in stocks and bonds, which are great ways to build wealth over time. Or you can put your money into a personal finance app like Personal Capital, which helps you manage your investments and monitor your spending.
Personal Capital is a free tool that lets you see exactly what’s happening with your assets. From checking your net worth to tracking your progress toward building wealth, Personal Capital provides actionable insights about your finances. Plus, it makes it easy to keep tabs on your finances in real time.
Here’s how it works: Every month, Personal Capital sends you a snapshot of your balance sheet — including your net worth, debts, and investment accounts. Then, it compares your actual performance against your goals. So if you want to know how close you are to meeting your long-term financial goal, Personal Capital gives you a scorecard.
You can use Personal Capital to set financial goals such as paying down debt, saving for college, or investing for retirement. Once you enter your information, Personal Capital generates reports tailored to each goal. For example, if you’re trying to pay down credit card debt, Personal Capital will tell you how much you owe and how fast you plan to pay it off. If you’re looking to save for a future vacation, Personal Capital will let you know how much you need to contribute to your 401(k).
Personal Capital doesn’t stop there. With tools called Smart Goals, you can automate your monthly contributions to your 401(k), automatically adjust your mortgage payment, or even add cash to your bank account without ever touching a checkbook.
Question #3: When can I start my retirement?
The average American worker spends about 40 hours per week working — including commuting time. But what happens when we stop working altogether? How long do we spend living off our savings? And how much money do we actually need to live comfortably in retirement?
To answer those questions, let’s take a look at how much money Americans are spending every year to save for retirement. Then, we’ll use a simple calculator to estimate how many months it takes us to reach financial independence.
We’ll start with some basic information like age, income, and savings amount. Next, we’ll plug that into a popular online retirement calculator called “How Much Do You Need To Retire?”. This tool uses data from the Social Security Administration to provide estimates of monthly benefits.
Then, we’ll calculate how many months it takes to accumulate $1 million in savings. Finally, we’ll see how much money we’d need to live on during retirement.
Here’s a breakdown of the numbers:
Age: We’re going to assume that most people will work until they’re 65.
Income: Let’s say we make $50,000 annually.
Question #4: How long will my savings for retirement last?
The average American worker spends roughly 40 years building up his or her nest egg. However, if you want to retire earlier, there are ways to do it. You just have to make some adjustments to your lifestyle. Here’s what you need to know about retiring early.
Inside the Retirement Calculator, market adjustments
The retirement calculator is one of those tools that you think about every day. You know it’s there, but you don’t really use it. However, I’ve found that most people aren’t aware of how much money they need to retire. And even if you do know what number you need, it’s hard to figure out where to start saving. So, I built a tool that helps you calculate exactly how much you need to retire today.
I’m sure you’re wondering why I didn’t just make up some numbers. Well, I did. But I used real data from the Bureau of Labor Statistics. This way, you can see whether you’re on track to meet your goal.
You might be surprised to learn that many people have less than $100,000 saved for retirement. If you’re like me, you probably thought you had enough. But you’ll find out that you actually need twice as much as you thought. In fact, according to my calculations, you need around $200,000 to retire comfortably.
Frequently Asked Questions
What Are Roth IRA Income Limits?
The Roth IRA is one of the best retirement savings vehicles out there because it allows you to invest money without having to pay taxes on it during withdrawal. However, like many things in life, there are rules. In fact, if you’re self employed, you might find yourself subject to different limits than someone working for a large corporation. Read on to learn what you can do about it.
Am I Eligible to Contribute to a Roth IRA?
If you’ve ever wondered whether or not you qualify to contribute to a Roth IRA, here are the rules:
• You must be 18 or older.
• Your modified adjusted gross income cannot exceed $129,000 ($191,500 for married couples filing jointly).
• You can’t have too much money saved outside of retirement accounts.
• You don’t have to pay taxes on your contributions.
• You can contribute up to $5,500 per person ($6,500 for joint filers), every year.
However, you can’t contribute any more than you make, regardless of how much you earn. If you’re making $50,000 a year, you can’t contribute $10,000 to a Roth account.
So, if you’re wondering if you’re qualified, check out our Roth IRA calculator to see if you meet the qualifications.