Retirement calculators can help us plan and prepare for retirement even when there are many years to go. These online calculators are invaluable tools to determine how much money you need to save for your retirement. Also, these calculators may also display the impact of inflation on your savings.
Retirement calculators come in all shapes and colors, but most aim to answer three things:
- Your estimated expenses in retirement
- Your estimated income in retirement
- And how much retirement savings you’ll need to retire
However, different calculators use different methods to calculate assumptions and make recommendations. For example, a simplistic retirement calculation might say that you need 10 times your pre-retirement income to retire. But, for many, this is far too simplistic. To be sure, if you compare the best retirement planning calculators available, you’ll likely find striking differences in their results. For this reason, it’s recommended to use the calculator that best suits your individual needs before executing a retirement plan.
Here’s a list of our top three retirement planning calculators based on their features.
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1. Personal Capital
When it comes to investment and retirement tools, the Personal Capital retirement calculator is a fan favorite. The calculator considers your age, how much you intend to contribute to your retirement accounts each year, and what your expected retirement expenses will be.
From there, it makes a simplified determination based on a percentage, if you’re on the right track, or not. For example, according to Personal Capital, a 30-year-old with $100,000 in retirement savings, that contributes $10,000 a year to their retirement, has a moderate risk tolerance and expects $40,000 a year in retirement expenses has an 87% chance of outliving their retirement funds if they retire at age 65.
2. Early retirement calculator
Many retirees today combine many different streams of income to cover their living expenses in retirement. Try to think holistically and include all of these income sources in your retirement calculations.
For example, you might collect $1,500 from Social Security, $500 in monthly cash flow from rental properties, $500 from bonds or CD’s, $1,500 from stock dividends or options income, and another $1,000 from selling some stocks, for a total of $5,000 per month.
Of course, you don’t have to wait until you reach Social Security age to retire. Instead of $1,500 in Social Security benefits, you could generate that with semi-retirement gig work such as consulting on your own schedule. As a younger retiree, you also have the option to return to work if you want more money, allowing you the flexibility to make higher-risk, higher-return investments. Try this early retirement calculator from SparkRental.com.
3. The Bankrate retirement calculator
The Bankrate Retirement Calculator is a more comprehensive tool that offers a more personalized snapshot of what your finances in retirement could look like. Example questions revolve around your current age, savings, and amounts in your retirement accounts (I.e. IRA, Roth Accounts, 401(k)’s, etc). Not only that, but the calculator also factors in other things such as expected salary increases, and how many years of retirement income you’ll need.
Additionally, since many retirees are living longer, inputs such as inflation, rates of return pre and post-retirement are also very helpful.
Retirement calculators will let you see how much your savings and retirement benefits could be worth in the future. They also help you determine how much money you need to save so that during retirement, you can easily make ends meet. If you want to live comfortably during your retirement years, it is important that you start saving early. Additionally, retirement calculators may also suggest other financial goals which you should prioritize or forget if they are not feasible in the long run.
So what are you waiting for? Don’t hesitate to use a retirement calculator today.
Rick Orford is a Wall Street Journal, USA Today, and Amazon best-selling author, investor, and mentor. He’s appeared on Good Morning America and has been featured in the Washington Post, Yahoo Finance, MSN, Insider, and more. His passion is personal finance, and he works tirelessly to deliver content in an easy-to-understand manner.
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