Retirement Calculator for Investing and Saving into a Comfortable Retirement
The Rule #1 retirement calculator can help you determine how much money you would have to save each year in order to achieve a retirement account large enough for you to live on during your retirement years. By considering factors such as how much money you will need to live on, how many years you have until you plan to retire, and how long you think your retirement will last, the calculator determines how much annual savings you have to put away so you can reach your goals without running out of money during retirement.
Working and Saving
Working and Investing Rule #1 Style
Finding Your Number
Where prompted, enter the following numbers into the retirement calculator above:
Lifestyle Cost: This number should be based on how much you live on right now. Decide how much of it will be necessary to live on during retirement. For most people, this is about 80 to 100% of your current lifestyle cost.
Rate of Inflation: This number, currently, should be around 3-4%. This is based on the average rate of inflation we’ve seen over the last ten years or so.
Years Before Retirement: This is the number of years you have until you have to retire. If you plan to retire at around 65 years old and you’re currently 45, you’d enter 20 here.
Years In Retirement: This is how long you think you’ll be in retirement. If you’re fairly healthy, give yourself plenty of time now that people are living longer. If you retire at 65, let’s assume you’ll be around for another 30 years.
Investment Capital Today: This is the amount of money you have available to start investing today. Estimate what you have saved or think you’ll have saved when you’re ready to retire. Above, for the purpose of the example, we’ve used $40,000.
Additional Capital To Save Each Year: This is the amount of money you can save each year to add to your investments. We used $12,000 as an example above since that's only about $1,000 a month you can save over the course of the year. If you're using a ROTH IRA account exclusively then you may have a contribution cut-off of $5,500 or so. Use any number here based on what you think you can save and contribute on an annual basis.
Rate of Return: The average rate of return is estimated differently depending on who you talk to. Some financial advisors range from under 5% to over 12% - I’m going to use an estimate of 5% here to take into account bond funds, stock funds, and some market downturns. If you’re a Rule #1 Investor, you can probably count on around 15% returns or higher.
How Much Money Do I Need to Retire?
By using my easy retirement calculator you can start to see how investing for retirement can make a huge difference in what your retirement account may or may not look like in 10 or 15 years and determine what steps you should be taking to make sure you have what you need.
If you have a set amount of money put away that you plan to live off of, that money will slowly lose value over time due to the rate of inflation. For this reason, simply saving your money for retirement is not the best approach to take.
In order to grow your retirement funds you can put them in an investing account where you can choose wonderful businesses you believe in for your portfolio. This will help put your money to work for you so it’s constantly growing itself. On top of that, adding extra money into this account every year until you retire will compound over time with the portfolio performance and could be the difference between entering retirement with $250,000 and $1.1 million.
Don’t leave your life in retirement up to chance. With my free calculator you can learn exactly what your retirement number should be and start to take the necessary steps to ensure you can get there.
If you would like a spreadsheet to keep that will help you figure out what your number is, or should be, you can download this retirement worksheet. Otherwise, you can bookmark this page and come back at any time to calculate your number.
Get started by watching my What’s Your Number video below to see my demonstration for using this calculator.
Now that you know what you’ll need to retire comfortably, take the next step and attend Phil’s free Transformational Investing Webinar.
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