Making a Retirement Budget
There are several steps to ensuring that your current savings plan is adequate to support your retirement. Taking the time to carefully go through each one can help give you peace of mind as you near this important transition period.
- Calculate the amount of savings you’ll need. The calculator on this page is designed to help you do just that. Err on the side of caution with your estimates. It’s better to get an initial number that’s too high than to plan your retirement around a budget that won’t last.
- Consider all sources of income. This includes Social Security payments, returns on investments, current income and any potential inheritance money you’ll have access to in the future. Don’t forget to figure in any taxes you might have to pay on each type of income.
- Get a grip on expenses. Make a list of all the things that could be a drain on your budget and consider eliminating the ones you don’t need. Whether daily latte purchases are adding up or your old house is demanding too many repairs, eliminating excess spending before you retire could save your budget later on. Break expenses down into categories like essentials, required monthly expenses and luxuries to give yourself an idea of how much money is going out at a time and where you might be able to cut back.
- Make a plan. After considering all of these aspects, sit down and plan out how your money will be used after you retire. Consider hiring a financial adviser who can point out things you may have missed and help you develop a consistent savings plan for the years remaining until your retirement.
How to Use the Retirement Calculator
The “How Much Will I Need to Retire” Calculator requires the following inputs:
- Required annual income for the years following retirement
- How many years are left until you retire
- How many years you expect to have after retiring
- The percentage of annual inflation
- How much of a return you’re getting on your retirement money
Put each of these figures into the calculator and click the “Calculate” button to get an idea of how much money you’ll need to have a comfortable retirement. Remember that the final amount depends on many factors that may change depending on circumstances. It’s always a good idea to recalculate from time to time, factoring in new developments and expenses to ensure a more accurate dollar amount.
This calculator provides an estimate of the funds necessary to support your lifestyle once you retire. Working with a professional will give you a clearer picture of how to budget and ensure that you have enough money on hand for all of your post-retirement expenses.