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Retirement Income

Use this calculator to determine how much monthly income your retirement savings may provide you in your retirement. Your annual savings, expected rate of return and your current age all have an impact on your retirement's monthly income. View the full report to see a year-by-year break down of your retirement savings.

Definitions

Starting balance

Initial balance that you have in your retirement accounts.

 

Annual contributions

The amount you will contribute to your retirement savings each year. This calculator assumes that you make your contribution at the beginning of each year. This should reflect the total you save toward your retirement. This should include any 403(b), 401(k), or 457(b) plans and your employer contributions to these plans. It should also include any other retirement accounts such as an IRA or a Roth IRA and any retirement savings in non-retirement accounts. This calculator assumes that you make one annual contribution at the start of each year, and any withdrawals happen once per month at the beginning of each month.

 

Current age

Your current age.

 

Age of retirement

Age you wish to retire. This calculator assumes that the year you retire, you do not make any contributions to your retirement savings. So if you retire at age 65, your last contribution happened when you were actually age 64.

 

Rate of return before retirement

This is the annual rate of return you expect from your investments before taxes. The actual rate of return is largely dependent on the type of investments you select. From January 1970 to December 2008, the average annual compounded rate of return for the S&P 500, including reinvestment of dividends, was approximately 9.7% (source: www.standardandpoors.com). During this period, the highest 12-month return was 61%, from June 1982 through June 1983. The lowest 12-month return was -39%, which happened twice, once from September 1973 to September 1974 and again from November 2007 to November 2008. Savings accounts at a bank may pay as little as 1% or less but carry significantly lower risk of loss of principal balances.

It is important to remember that future rates of return can't be predicted with certainty and that investments that pay higher rates of return are generally subject to higher risk and volatility. The actual rate of return on investments can vary widely over time, especially for long-term investments. This includes the potential loss of principal on your investment. It is not possible to invest directly in an index and the compounded rate of return noted above does not reflect sales charges and other fees that funds and/or investment companies may charge.

 

Rate of return during retirement

This is the annual rate of return you expect from your investments during retirement. It is often lower than the return earned before retirement due to more conservative investment choices to help insure a steady flow of income. The actual rate of return is largely dependent on the type of investments you select. From January 1970 to December 2008, the average annual compounded rate of return for the S&P 500, including reinvestment of dividends, was approximately 9.7% (source: www.standardandpoors.com). During this period, the highest 12-month return was 61%, from June 1982 through June 1983. The lowest 12-month return was -39%, which happened twice, once from September 1973 to September 1974 and again from November 2007 to November 2008. Savings accounts at a bank may pay as little as 1% or less but carry significantly lower risk of loss of principal balances.

It is important to remember that future rates of return can't be predicted with certainty and that investments that pay higher rates of return are generally subject to higher risk and volatility. The actual rate of return on investments can vary widely over time, especially for long-term investments. This includes the potential loss of principal on your investment. It is not possible to invest directly in an index and the compounded rate of return noted above does not reflect sales charges and other fees that funds and/or investment companies may charge.

 

Current tax rate

Your current marginal tax rate you expect to pay on your taxable investments.

 

Retirement tax rate

The marginal tax rate you expect to pay on your investments at retirement.

 

Expected inflation rate

What you expect for the average long-term inflation rate. A common measure of inflation in the U.S. is the Consumer Price Index (CPI), which has a long-term average of 3.1% annually, from 1925 through 2008. The CPI for 2008 was 4.0%, as reported by the Minneapolis Federal Reserve.

 

Years of retirement

Number of years you expect to live in retirement.

 

To increase deposits with inflation checkbox

Check this box if wish to have your annual contribution increased each year to keep up with inflation.

 

If savings is tax deferred checkbox

Check this box if your retirement savings is being deposited into a tax deferred account. This includes an IRA, 401(k), 403(b), governmental 457(b), variable annuity or other tax deferred investment.