How to Use a Retirement Calculator

A Retirement calculator is a tool to help plan for your financial future. It can estimate the amount of money you will need to retire, how much you should be saving on a regular basis to reach your goal and what your potential retirement income will look like in the future based on different withdrawal rates.

Exponent Investment Management calculations can help reduce uncertainty by providing a concrete goal and a roadmap instead of an intimidating set of unknowns. They can also help with big decisions such as when to retire or how much risk to take in investments. Calculators are a valuable tool, but can be misleading when used incorrectly. They are essentially mathematical projections of input assumptions, and they only give an estimate of the outcome based on those chosen assumptions.

Retirement Calculator: Estimate Your Retirement Needs

Yearly Pension Benefit: The amount of money you will receive yearly after retiring. It is calculated as the current account balance plus expected contributions from both the participant and employer between now and retirement age, investment earnings on those amounts and then discounted into present value.

Include Social Security: This calculation will increase the estimated annual income by adding in a spouse’s Social Security benefits. Social Security benefits are based on a formula that takes in to account your earnings, when you start collecting and how long you live.

Inflation: This calculation will add in an expected long-term inflation rate. Inflation is a difficult number to forecast because it is impossible to know what prices will be in the future. Even Ph.D. experts that spend their careers studying inflation struggle to project it accurately just one year into the future.