Retirement Calculator

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The key to your personal calculation of what you will need at retirement and how you will get there is a function of:

• The number of years you have until your retirement i.e., Do you want to retire ar age 55, 60, 62 or 65?
• Use 3% for the rate of inflation--which means 24 years from now you will need twice as much money to have the same buying power as your income buys today. If you determine that you need $60,000 to retire on today (2004) and you actually retire in 24 years (2028) you would need to generate $120,000 in 2028 dollars to have the same buying power as your $60,000 has in today's dollars.
• The trouble with most retirement calculators is that you will not need nearly as much money to retire on as you think. Most of the retirement calculators project that you will need at least 75% of what you make today to be able to retire. Will you really need that much?
• Be aware of who has created the retirement calculator and what (if anything) are they trying to "sell" you?
• Start early and save on a regular basis (at least 10% of your gross earnings per week, if possible).
• Take advantage of all methods of saving that allow you to accumulate savings without being taxed on the growth of your money until you actually retire e.g. 401(k), Roth IRA, etc.
• Will you receive any inheritance before you retire?
• If you project that you will have your house and car and other major debts paid off at retirement this will help a great deal.
• How much will you get from Social Security if it is there for you at retirement? See the following site from Social Security on-line: www.ssa.gov/planners/calculators.htm
• Make sure you are taking into account all of the possible sources of retirement revenue that you believe will be there for you.

Note: Take advantage of the miracle of compound interest as early as possible. See chart below.