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Based on information you provide in the first tab, the planner attempts to figure out the number of years until retirement and your life expectancy. The planner uses this information to invest and distribute your retirement contributions for the appropriate durations of time. You will find the following variables in the first tab:
| Gender | |
You usually have a lower life expectancy if you are a man than if you are a woman. |
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| Life Expectancy | |
The planner estimates your life expectancy based on simplified actuarial tables.You can also choose to enter your own life expectancy. |
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| Current Age | |
Based on your current age and the age at which you wish to retire, the planner will infer how much time is available for you to invest before you will start withdrawing. |
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| Retirement Age | |
This is the age at which you wish to retire. The retirement age along with the current age determines how much time is available to invest. The retirement age and the life expectancy determine how much time you need your investments to last. |
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Based on information you provide in the second tab, the planner attempts to figure out how your contributions towards retirement will grow until you retire. The planner also obtains information about what the average inflation and your retirement needs are likely to be. This information will be used by the planner to figure out whether the contributions you make to your retirement account over the pre-retirement period will provide for your expenses during your retirement. You will find the following variables in the second tab:
| Inflation | |
The inflation is used to normalize income growth during the period before retirement. Only the income growth above the inflation is considered towards computing the retirement contributions. |
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| Income Growth | |
The rate at which your income grows during the period before retirement. This growth is tempered using the inflation rate when computing the retirement contributions. |
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| Tax Rate | |
The Tax Rate will be used to determine your taxable savings for retirement contribution. |
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| Current Income | |
This is your current annual income. Along with the income growth and the retirement needs values, this will determine what your expenses are likely to be during retirement. |
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| Retirement Needs | |
The percentage of your pre-retirement income that you estimate you will need during retirement. Conservative retirement plans will use 100% of your pre-retirement income, thereby making you save more towards retirement. |
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| Retirement Expenses | |
This computed value indicates the expenses you will need during retirement, based on your current income and your expected needs at retirement. The planner shows the expected retirement income in today's dollars since inflation makes it hard to visualize the income from a time in the future. |
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The third tab allows you to analyze your retirement situation. The planner obtains information about what percentage of your income you wish to contribute and whether your company makes any contributions towards your retirement. You will find the following variables in the third tab:
| Retirement Contribution | |
This is the percentage of your income you wish to contribute towards your retirement. This planner currently does not limit your contributions by the federal maximum. |
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| Company Match | |
This is the percentage of your income that your company will contribute towards your retirement. Please note that the planner does not enforce any limits that your company may impose on the matching contributions.
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You can choose to compute one of the following variables and modify the others:
| Taxable Savings | |
This is the amount of savings that you currently have in taxable retirement accounts. You can click this button to figure out how much you need to have in retirement accounts right now in order to meet your retirement needs. |
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| Tax Deferred Savings | |
This is the amount of savings that you currently have in tax-deferred retirement accounts. You can click this button to figure out how much you need to have in retirement accounts right now in order to meet your retirement needs. |
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| Return on Investment | |
This is the interest that your retirement account is expected to earn annually. Click on this button to figure out how much your tax-deferred investments should earn on the average for you to reach your retirement goal. |
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| Available at Retirement | |
This is the amount of money available to you annually while you are in retirement. Click on this button to figure out how much money will be available to you in retirement based on all the sources. |
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As always, the answers are only as far as a mouse click or a mouse drag away. Have fun playing with the planner. |
