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Using a Retirement Calculator
By Frank Watson

Everyone needs to plan for retirement, a retirement calculator can help plan for retirement by allowing individuals to enter their goals and other information to have a great idea of how much money they will have upon retirement. One needs to know their savings to date, their annual yield, current tax rate, inflation rate, retirement tax rate, annual retirement income, other income, age, retirement age, age to be withdrawing from, and whether or not retirement contributions are sheltered from taxes to use a retirement calculator. Retirement savings refers to the amount of money one has saved in total as of the current date; it can be useful to know this before attempting to use a retirement calculator. Annual retirement income is the amount of money one would actually need in total to live after they quit working; when estimating this it should total no less than 70% of their current income to maintain the same standard of living.

Tax Rates and Other Things to Consider

To determine ones annual yield a prospectus, or their documents detailing their stocks, bonds, mutual funds, and other investments; from these documents one should be able to calculate their rate of return. Another essential part of the retirement calculator is the other income one may expect to have, such as social security, pension, or part-time employment will contribute to the total yearly income. When trying to calculate the inflation rate one must consider the current rate of inflation combined with the expected rate which inflation will rise over the course of ones remaining working words, and retirement years.

Calculating the retirement age can be confusing, especially when considering the money factor, as of 2006 anyone born after 1960 should count on not receiving their social security benefits until at least age 67; the age at which a person is allowed to collect social security benefits is steadily rising every year. Tax rates when considering ones retirement calculator refers to the persons tax bracket; conversely their retirement tax rate should reflect what one thinks their tax bracket would be upon retirement age.

When calculating retirement knowing whether a the contributions are tax sheltered or subject to taxes are important to know; accounts like 401K and retirement IRAs will not be subject to taxes for example, but many other types may be. Calculating retirement is an important part of every person’s financial planning, especial long term planning, knowing which areas are weak and which are strong can help a person be confident in their investments and financial future.

Author Details:
Frank Watson retired from work a couple of years ago and now, in his spare time, writes articles, for various web sites about retirement and related topics.

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