Retirement Calculator

Shawn Plummer

CEO, The Annuity Expert

How much money will you need to save to retire comfortably? If you aren’t certain, don’t worry – you’re not alone. Retirement planning can be complex, but starting early is essential. With the best retirement calculator like ours, you will be able to get a realistic idea of how much money you will need to save to achieve your retirement goals.

So, what are you waiting for? Start using our retirement calculator today!

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Calculate Your Retirement Savings

While you receive a monthly working income, it may have occurred to you whether your pension benefits will be enough to cover all the expenses. With the fluctuating inflation, plans to travel around the world may lurk in the background without actual fruition. And with current worries of paying off debts and mortgages, retirement may not seem as enticing as is often advertised.

Consequently, to make your retirement dreams come true, planning ahead is vital. Whether you retire early or acquire a passive income, a secure retirement is not an overnight decision but a planned-ahead strategy.

Our free realistic retirement calculator utilizes today’s dollars to foretell your potential retirement nest egg and how it could expand over your retirement. We factor in inflation when making our predictions, and we make assumptions that include the following:

  • The length of time you will save.
  • Your monthly contribution amount.
  • The amount invested so far.
  • Expected rate of return.
  • A 2.9% inflation rate. (You can adjust this rate.)
  • Your expected retirement return rate.
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Don’t Forget Social Security Benefits

Social Security can complement annuities, investments, and savings as part of an income planning strategy.

  • Annuities are financial products that provide a steady income stream for a certain period or the rest of your life.
  • Investments, such as stocks, bonds, and mutual funds, can also provide income through dividends and interest.
  • Retirement savings, such as a 401k or IRA, can generate income through interest or withdrawing funds.

By combining these different sources of income, you can create a retirement plan that provides a stable, reliable source of income to cover your annual retirement expenses. Social Security can provide a foundation for your income. In contrast, annuities, investments, and retirement savings can provide additional income to supplement your Social Security and help you maintain your desired living standard.

One potential benefit of combining Social Security with annuities, investments, and retirement savings is that it can provide flexibility and control over your and your spouse’s income.

For example, you can start receiving your Social Security income later to receive a higher monthly benefit amount and use your annuities, investments, and savings to cover your expenses. This can help to ensure that you have a steady source of income throughout your retirement, even if your needs or circumstances change.

Realistic Retirement Calculator

How Do I Save For Retirement?

One of the most important financial decisions you will make is how to budget and save. There are several factors to consider, such as when you want to retire and how much income you will need to support your lifestyle.

A retirement investment calculator can be a helpful tool in estimating how much you need to save. Generally, it is recommended that you set aside 10-15% of your monthly income for retirement.

One way to save is to invest in an annuity.

Unlike 401k, traditional, and Roth IRA accounts, deferred annuities are tax-advantaged retirement accounts with no contribution limits that allow you to grow your retirement funds over time and receive guaranteed payments later.

Why is this so important?

The deferred annuity is the only retirement savings plan that can show precisely how to achieve your income goals on a contractual guaranteed basis despite the future performance of your savings accounts. As a result, the annuity takes all the guesswork out of retirement.

Unlike an individual retirement account (IRA), 401k, and other retirement accounts, nonqualified annuities reduce your taxes in retirement because only the interest earned is considered taxable income. These tax benefits allow you to maximize most of your gross income.

Regardless of how you save, starting early and making consistent contributions is essential to provide a comfortable retirement.

Tell Me The Best Way To Save For Retirement.

When it comes to saving for retirement, there’s no one-size-fits-all approach. The best way to save will vary depending on your circumstances and goals. However, a few general tips can help make it more efficient.

  • First, set a target retirement age and ensure you contribute enough to reach your investment objectives. Include estimated Social Security (preferably at full retirement). Finally, decide whether to fund the savings account with pre- or post-tax income.
  • Second, start early. Saving for retirement early will leave you with a surplus in the long run. Good financial decisions will grow your retirement savings to the point that you may enjoy early retirement in good health.
  • Third, consider investing in an annuity. An annuity will reverse engineer how much you contribute monthly to achieve your target retirement savings goal.
  • Finally, don’t forget to take advantage of any employer matching programs.

By following these tips, you can ensure you’re on the right track to a comfortable retirement.

When’s Your Perfect Retirement Age?

There is no one-size-fits-all answer to the question of the perfect age. Instead, the right retirement age will depend on various factors, including personal goals, financial situation, and health.

One important consideration is your eligibility for Social Security benefits.

  • You can start receiving Social Security at your full retirement age, determined by your birth year.
  • If you start receiving benefits before your full retirement age, your benefits will be reduced, while if you wait until after, your benefits will be increased.
  • The Social Security Administration says you can receive your benefits as early as age 62, but doing so will permanently reduce your monthly benefit amount.

Another important consideration is your financial situation. Ideally, it would be best to have enough savings and other income sources to cover your retirement expenses. This may require careful planning and saving throughout your working years. You should also consider factors such as inflation and market volatility, which can affect the value of your retirement savings accounts and investments over time.

Your health is another essential factor to consider when deciding when to retire. For example, suppose you are in good health and can continue working. You may delay your retirement to save money and earn full Social Security benefits. On the other hand, if you are in poor health or have a medical condition preventing you from working, you may need to retire earlier than planned.

Ultimately, the perfect age will be different for everyone. Therefore, it is essential to carefully evaluate your personal goals, financial situation, and health and to consult with a financial advisor or other professional, if necessary, to determine the right time to retire.

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How much do you need to retire?

While a retirement savings calculator will forecast how long your current retirement savings will last, it won’t tell you how much you need to spend the rest of your life comfortably. It goes without saying that your primary task should be to pay off your debts like car loans or credit card bills. And only then does your monthly budget for retirement start to fill up.

With this in mind, most financial experts recommend saving enough money to provide 80% of your pre-retirement income. So, if you’re earning $50,000 in annual income, you’ll need roughly $40,0000 annually. If you have other sources of income, such as a pension or Social Security, you may not need to save as much.

Take into consideration your retirement lifestyle. Do you plan on traveling to Europe or fulfilling your dreams of moving to an exotic place? If you have costly retirement plans, clearly, you will need to work a bit harder to live up to the standard you want. In contrast, if all you care about is covering medical expenses and having enough to pay off daily expenses, your retirement portfolio may include only a handful of investments.

The key to saving for retirement is setting realistic retirement goals. Your investment choices should reflect your plans for the future. Setting the smallest amount for daily spending won’t let you enjoy your retirement in peace and comfort. Similarly, your accumulated long-term investments might not be sufficient to fund trips to see the Seven Wonders of the World.

A Free Realistic Retirement Calculator For Savings And Income Goal Planning With Social Security, Pensions, And Investments

The 4% Rule

Financial advisors have advocated the 4% rule for generations to ensure that retirees never run out of money. The rule goes like this: If you withdraw 4% of your portfolio each year, you can expect your money to last 25 years.

But is this true?

Recent studies have shown that the 4% rule is no longer accurate.

In today’s low-interest environment, generating enough income from an investment portfolio to sustain a 4% withdrawal rate is almost impossible. And, with life expectancy rates rising, many retirees find that their money must last 30 years or more.

So what’s the solution?

One option is to purchase an annuity, which will provide guaranteed income for life. This can help to ensure that you never outlive your nest egg. However, annuities have pros and cons, so speak with your financial advisor (or contact us) for investment advice to see if they’re right for you.

The 10% Rule

The 10% rule is another approach to saving for retirement, where you need to put roughly 10%-15% of your gross pay aside. This saving technique is suitable for people in their 20s who have 40-50 years ahead before retiring.

Will it be enough to retire?

Not exactly. The 10% rule sounds practical and easy to achieve in theory, but it won’t be enough to retire. This rule depends on your current age and yearly salary increase. People who are just starting their careers will need at least a 6% increase in their yearly pay, which may be unrealistic to achieve.

What is a better way to retire early?

As mentioned above, purchasing an annuity will guarantee a stream of additional income for the rest of your life. Unlike a traditional IRA, an annuity will increase with time as the cost of living becomes higher and also will not drop. The annual fees are smaller, and you don’t risk outliving your long-term investment.

How Long Can Your Money Last?

The table below compares using an annuity to distribute your income by systematically withdrawing from retirement plans or through financial advisors.

FeaturesAnnuity401 kIRARoth IRAs
Withdrawal Percentage5.20% – 6.55%4%4%4%
Can Income Increase?YesYesYesYes
Can Income Decrease?NoYesYesYes
How Long Will Money Last?Lifetime30 Years+30 Years+30 Years+
Annual Fees0 – 1.50%1% – 4%1% – 4%1% – 4%
Death BenefitAccount BalanceAccount BalanceAccount BalanceAccount Balance

Example: A 60-year-old retiree starts withdrawing immediately from their $1 million portfolio, they would receive:

  • Annuity: Between $52,000 and $61,000
  • 401k: $40,000
  • IRA: $40,000
  • Roth IRA: $40,000

Impact Of Inflation On Retirement Savings

For many people, retirement savings are crucial to their financial planning. However, inflation can significantly impact the value of these savings over time.

Like Social Security Benefits, an annuity is a type of investment that can help to protect against this by providing a stream of income that increases along with the cost of living. This can help retirees maintain their standard of living even as prices go up.

Additionally, some annuities offer unique features that help keep up with inflation, such as cost-of-living adjustments.

By including an annuity, people can help ensure the purchasing power of their retirement savings will last as long as needed and maintain the value of today’s dollars.

Next Steps

The best way to ensure a comfortable retirement is to plan for it as soon as possible. And the earlier you start saving, the better off you’ll be. There are many ways to budget and save, and each person’s needs will differ. But our simple retirement calculator can help you understand how much money you’ll need to retire comfortably. Consider investing in a guaranteed return plan if you want extra Security in your golden years. We can help you find the perfect retirement plan for your needs and budget. So don’t wait – contact us today for a quote.

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Frequently Asked Questions

How much realistically do I need to retire?

A good rule of thumb is to aim for a retirement income of 80% of your pre-retirement income.

What is the best retirement calculator?

The best retirement calculators will estimate how much income you’ll need at retirement age and recommend ways to help you reach your goal.

What is the 70% rule for retirement?

The 70% rule is a guideline that says you should expect to need 70% of your current income in retirement. This rule assumes you will no longer have work-related expenses like transportation and clothing. This percentage accounts for reduced expenses, such as work-related costs and savings contributions, that typically decrease once you have retired. However, you may still have other expenses, such as healthcare costs.

What is a good retirement per month?

Aiming for 80% of your pre-retirement income is a general rule of thumb. Our retirement calculator will give you a good starting point to estimate how much retirement savings you’ll need to retire.

What is the average Social Security Benefits check?

According to the Social Security Administration, the average monthly Social Security retirement benefit for retired workers is $1,837.29 (as of June 2023).

What is the 70% rule for retirement?

The 70% rule for retirement suggests that retirees should aim to replace approximately 70% of their pre-retirement income to maintain their standard of living during retirement. This percentage accounts for reduced expenses, such as work-related costs and savings contributions, that typically decrease once retired.

How do I figure out how much retirement income I need?

Estimate your retirement income by first identifying your expected expenses in retirement, including housing, food, healthcare, travel, taxes, and leisure activities. Then, subtract guaranteed income sources such as Social Security, pensions, or annuities. Aim for a retirement income that can cover this amount, with a general guideline being around 70-80% of your pre-retirement income. Ensure to consider inflation and unexpected expenses.

What is a good retirement income per year?

A “good” retirement income depends on personal lifestyle and cost of living, but a common rule of thumb is to aim for 70-80% of your pre-retirement income. For instance, if you earn $100,000 annually before retirement, aim for $70,000-$80,000. Consider guaranteed income sources, like Social Security, annuities, or pensions, in your calculations. Adjust these numbers according to your specific financial needs and goals.

What is considered a lot of money to retire with?

The concept of “a lot of money” for retirement varies based on individual needs, local cost of living, desired lifestyle, and potential medical expenses. In the U.S., many financial advisors recommend having $1 million to $2 million saved. However, personal circumstances and goals significantly influence the ideal amount.

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Shawn Plummer

CEO, The Annuity Expert

I’m a licensed financial professional focusing on annuities and insurance for more than a decade. My former role was training financial advisors, including for a Fortune Global 500 insurance company. I’ve been featured in Time Magazine, Yahoo! Finance, MSN, SmartAsset, Entrepreneur, Bloomberg, The Simple Dollar, U.S. News and World Report, and Women’s Health Magazine.

The Annuity Expert is an online insurance agency servicing consumers across the United States. My goal is to help you take the guesswork out of retirement planning or find the best insurance coverage at the cheapest rates for you. 

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