Quick Retirement Calculation
I do not recommend a quick
retirement calculation as
your final solution. This procedure will give you a quick
snapshot of
your retirement planning.
For this quick version, we will use the
MSN
Retirement Calculator. You will need to follow these steps to prepare
your input for the MSN calculator.
- Decide the year when you are
going to retire.
- Use the
ICMA-RC Longevity Calculator to calculate your life expectancy.
- Decide if you are going to
continue to work after your “formal” retirement and if yes, estimate how
much that job will pay. This is entered as “Other retirement income” on
the calculator.
- Gather this personal
information:
- Current age
- Current annual salary
- Percent of current salary
you save for retirement each year
- Current retirement savings
amount
- Average return on your
investment before retirement
- Estimated return on your
investment after retirement
- Use the rule of thumb that
you will need 75% of your income just before retirement to live on after
retirement. Calculate 75% of your current annual income as the amount
you will need to live after retirement.
- This calculator will
automatically plug in an estimated benefit from Social Security if you
desire.
Some weaknesses with this
calculation:
-
It does not cover couples.
The Social Security amount is estimated for the individual.
Double check your projected SS benefit against the estimate entered by
the calculator.
-
The inflation rate is assumed
at 3%. It might be higher.
-
The amount of "Other
Retirement Income" does not have a date when it stops. If this is
a retirement job, the calculator will overstate your other retirement
income since you will probably stop working at some point.
Remember that you will get out
of this what you put into it. Use this procedure for a quick calculation, but
do not plan the last 20 – 30 years of your life using it.
Perform your quick retirement calculation with MSN Calculator
Return to
Home Page
|
