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Why Rely on a Calculator for Retirement

It's a good idea to look for a calculator for retirement if you are ready to figure out when you can afford to stop working. Free retirement calculators are available on a number of difference financial websites. Even if you decide to leave the decision up to a financial professional, experimenting with a retirement calculator will help you understand the process better and allow you to ask more intelligent questions about your retirement options.

Information Needed with a Calculator for Retirement

If your goal is to decide the earliest date you can afford to retire, it's important to bring the information needed to make that calculation. If you have any investment accounts, whether it's an IRA, 401K or something else, make sure you have the latest statement available. It's a good idea to bring your most recent tax return and a current pay stub. If you have the government's latest Social Security benefit projection letter, bring that along, as well as any pay and Social Security benefit information for your spouse.

How to Make Speculative Retirement Calculator Entries

Some of the information needed for a calculator for retirement has nothing to do with a salary, benefit or investment you can look up. Instead, there are a number of points in which a calculator for retirement will ask for a subjective assessment - guesses really - on key issues. These include:

  • Yearly pay raises. Whether you are 5 years or 30 years away from retirement, any calculator for retirement will need to know how to deal with future years for salary purposes. Do you expect to earn what you made last year? Experts from Money Magazine and elsewhere say it only makes sense to be very conservative when it comes to salary and other projections. For example, in 2009, a study of private companies showed that only 20 percent offered pay raises. Assuming a yearly raise in pay that does not take place could mean a flawed retirement date.
  • Average inflation rate. Another question for most financial calculators is how to factor in cost of living increases. While many calculators use a 3 percent figure as a default setting, it's not a bad idea to increase that by a percentage point.
  • Stock market performance. Retirement calculators handle this question differently. Some will ask for a percentage rate you expect your investments to increase - on average - every year. Others use historical information on actual performance rates from the stock market to come up with a figure for investments that is more or less likely to happen, based on historical precedence. Using a conservative figure for stock market performance as well as other retirement estimates means you are more likely to have sufficient income to support the retirement age chosen by the calculator.

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