The Retirement Saving Calculator on this page will quickly estimate how much you will need to have saved by the time you retire in order to withdraw your desired monthly income for the duration of your life expectancy.
Plus, the calculator will also generate a year-to-year chart showing how your beginning balance will last for the number of years you want the income to cover.
Look, no matter how complicated the ivory towers of finance make their investment products, the key to retiring comfortably boils down to one simple principle:
1. Discover a work you would never dream of retiring from unless your health forced you to.
2. Downsize your current lifestyle (that's what businesses do, and your life IS a business).
3. Stop borrowing from your future income to subsidize today's wants.
4. Pay off all of your current debts as quickly as possible -- saving you (tens of) thousands of dollars in interest charges (tax-free returns).
5. Once debt-free, divert all or part of your freed-up debt payments into a Roth IRA.
Unfortunately, while most people know exactly how much they earn, they have no clue as to how much they are spending.
Between buying on credit and being totally unaware of the opportunity cost of their personal belongings (nearly everything you own is wearing out or becoming obsolete as we speak), most people end up retiring to a life of trying to pay their bills with half the income they had before they retired.
The real shame of it all, is that their banker would have gladly funded a large portion of their retirement for them.
When you deposit an amount of money to a bank, the bank in turn loans that money back out to a borrower. Of course the borrower pays a monthly finance charge on the outstanding balance until they pay off the loan.
The cool thing is, your bank gives you a cut of the finance charge proceeds. But better yet, each time one borrower pays the bank back, the bank borrows it out again and the process starts all over.
I know, nothing new there. But the point is, the longer you leave your deposit in the bank, the more times your money is borrowed out and paid back, and the more the bank pays you for that same one-time deposit.
Using the Saving Account Interest Calculator we can see that if you are age 44 and the bank pays you 4% on money you put into, say a Roth IRA, depositing $200 now will be worth the same as a $445 deposit that you make 20-years from now (at age 64).
In other words, you only put $200 toward your retirement, but your banker added another $245 -- without you having to do any additional work!
But, the longer you wait to deposit the $200 into your retirement savings account, the less the bank is going to contribute. In our example, waiting only one month will save the banker $2! Do you really want to help the bank to save money?
Don't let your banker off the hook!. Use the following Retirement Saving Calculator now to set a savings goal and then use the Savings Goal Deposit Calculator to calculate how much you need to set aside each month in order to meet your goal, then start saving today!
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Desired monthly retirement income: Enter your desired monthly retirement income. Remember that if you pay off all of your current debts and stop taking on any new debt, this number doesn't have to be anywhere near as big as you might think in order to live a comfortable retirement.
Annual return on investments (ROI): This is the percentage return you expect your investments will grow by -- which is influenced by the frequency that the interest is compounded. The retirement saving calculator bases its projections on monthly compounding.
Number of years to receive monthly income: Enter the number of years you would like your monthly retirement income to last (must be a number, so FOREVER will not work). Of course, you can always calculate your life expectancy and subtract your retirement age from that.
Total savings needed when you retire: Based on your entries this result is how much you will need to have saved by the time you retire. Remember, this estimate is before taxes and does not account for inflation.