Using a Retirement Income Calculator
All of us do acknowledge the fact that time and tide do not wait for anybody. Therefore, planning for retirement is extremely essential. Retirement planning promises a secured future to a person as well as his family. The basic approach which should be utilized while planning for retirement is to assess your income after retiring i.e. your post-work income. This refers to the amount of money required for affording a comfortable lifestyle at the present income level after a person retires.
The income of an individual post-retirement is greatly influenced by the age at which at individual wishes to retire. Another factor affecting the income is the amount of money needed by the individual on a yearly basis. Generally, an individual would want that 75-95% of his/her pre-retirement income is available to him/her post-retirement every year. Since many individuals get used to living on a definite income, the consistency needs to be maintained after retirement also. In this manner, the person would not be forced to witness a sudden decrease in his/her standard of living. Other aspects that need to be taken into consideration are the increase in average life-expectancy and rate of inflation.
Consult a financial advisor and get a rough estimate of the approximate figure you would need post-retirement. Usually, people think that their savings are sufficient. However, the reality is that we do not have enough of anything we require. The sooner a person gets an estimate of his income post-retirement; the better would be his future.
A retirement income calculator enables in determining the amount of money needed post-retirement. Generally, the information that needs to be entered in the calculator is the following:
The income of an individual post-retirement is greatly influenced by the age at which at individual wishes to retire. Another factor affecting the income is the amount of money needed by the individual on a yearly basis. Generally, an individual would want that 75-95% of his/her pre-retirement income is available to him/her post-retirement every year. Since many individuals get used to living on a definite income, the consistency needs to be maintained after retirement also. In this manner, the person would not be forced to witness a sudden decrease in his/her standard of living. Other aspects that need to be taken into consideration are the increase in average life-expectancy and rate of inflation.
Consult a financial advisor and get a rough estimate of the approximate figure you would need post-retirement. Usually, people think that their savings are sufficient. However, the reality is that we do not have enough of anything we require. The sooner a person gets an estimate of his income post-retirement; the better would be his future.
A retirement income calculator enables in determining the amount of money needed post-retirement. Generally, the information that needs to be entered in the calculator is the following:
- Present Yearly Income.
- Percentage of Present Income required for future.
- Other sources of income such as pension or social security.
- Number of years of work life prior to retirement.
The factors influencing retirement income include:
- Rate of inflation.
- Average Cost of Living (country-specific)
- Average rate of return
Based on the provided information, a person would be able to calculate the expected income. In case of a shortfall, a person would also be able to assess the amount of additional savings required.
However, all the calculators might not be same. A few calculators could also consider the life-expectancy or health of an individual. Nevertheless, majority of calculators handle the essential functions. Therefore, rather than considering all your expenses, simply focus on your essential expenses.
However, all the calculators might not be same. A few calculators could also consider the life-expectancy or health of an individual. Nevertheless, majority of calculators handle the essential functions. Therefore, rather than considering all your expenses, simply focus on your essential expenses.