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Use this calculator to determine how much monthly income your retirement savings
may provide you in your retirement. Your annual savings, expected rate of return
and your current age all have an impact on your retirement's monthly income. View
the full report to see a year-by-year break down of your retirement savings.
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Definitions
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- Starting balance
- Initial balance that you have in your retirement accounts.
- Annual contributions
- The amount you will contribute to your retirement
savings each year. This calculator assumes that you make your contribution at the
beginning of each year. This should reflect the total you save toward your retirement.
This should include any 403(b), 401(k), or 457(b) plans and your employer contributions
to these plans. It should also include any other retirement accounts such as an
IRA or a Roth IRA and any retirement savings in non-retirement accounts. This calculator
assumes that you make one annual contribution at the start of each year, and any
withdrawals happen once per month at the beginning of each month.
- Current age
- Your current age.
- Age of retirement
- Age you wish to retire. This calculator assumes that
the year you retire, you do not make any contributions to your retirement savings.
So if you retire at age 65, your last contribution happened when you were actually
age 64.
- Rate of return before retirement
- This is the annual rate of return you
expect from your investments before taxes. The actual rate of return is largely
dependent on the type of investments you select. From January 1970 to December 2008,
the average annual compounded rate of return for the S&P 500, including reinvestment
of dividends, was approximately 9.7% (source: www.standardandpoors.com). During
this period, the highest 12-month return was 61%, from June 1982 through June 1933.
The lowest 12-month return was -39%, which happened twice, once from September 1973
to September 1974 and again from November 2007 to November 2008. Savings accounts
at a bank may pay as little as 1% or less but carry significantly lower risk of
loss of principal balances.
It is important to remember that future rates of return can't be predicted with
certainty and that investments that pay higher rates of return are generally subject
to higher risk and volatility. The actual rate of return on investments can vary
widely over time, especially for long-term investments. This includes the potential
loss of principal on your investment. It is not possible to invest directly in an
index and the compounded rate of return noted above does not reflect sales charges
and other fees that funds and/or investment companies may charge.
- Rate of return during retirement
- This is the annual rate of return you
expect from your investments during retirement. It is often lower than the return
earned before retirement due to more conservative investment choices to help insure
a steady flow of income. The actual rate of return is largely dependent on the type
of investments you select. From January 1970 to December 2008, the average annual
compounded rate of return for the S&P 500, including reinvestment of dividends,
was approximately 9.7% (source: www.standardandpoors.com). During this period, the
highest 12-month return was 61%, from June 1982 through June 1933. The lowest 12-month
return was -39%, which happened twice, once from September 1973 to September 1974
and again from November 2007 to November 2008. Savings accounts at a bank may pay
as little as 1% or less but carry significantly lower risk of loss of principal
balances.
It is important to remember that future rates of return can't be predicted with
certainty and that investments that pay higher rates of return are generally subject
to higher risk and volatility. The actual rate of return on investments can vary
widely over time, especially for long-term investments. This includes the potential
loss of principal on your investment. It is not possible to invest directly in an
index and the compounded rate of return noted above does not reflect sales charges
and other fees that funds and/or investment companies may charge.
- Current tax rate
- Your current marginal tax rate you expect to pay on your
taxable investments.
- Retirement tax rate
- The marginal tax rate you expect to pay on your investments
at retirement.
- Expected inflation rate
- What you expect for the average long-term inflation
rate. A common measure of inflation in the U.S. is the Consumer Price Index (CPI),
which has a long-term average of 3.1% annually, from 1925 through 2008. The CPI
for 2008 was 4.0%, as reported by the Minneapolis Federal Reserve.
- Years of retirement
- Number of years you expect to live in retirement.
- To increase deposits with inflation checkbox
- Check this box if wish to
have your annual contribution increased each year to keep up with inflation.
- If savings is tax deferred checkbox
- Check this box if your retirement
savings is being deposited into a tax deferred account. This includes an IRA, 401(k),
403(b), governmental 457(b), variable annuity or other tax deferred investment.
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Information and interactive calculators are made available
to you as self-help tools for your independent use and are not intended to provide
investment advice. We can not and do not guarantee their applicability or accuracy
in regards to your individual circumstances. All examples are hypothetical and are
for illustrative purposes. We encourage you to seek personalized advice from qualified
professionals regarding all personal finance issues.
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