No matter what your age, retirement calculators can be a benefit to you in your retirement planning. Retirement calculators are easily accessible on the internet through a search, or you may have access to various calculators through your investment custodian(s).
Here are a few tips to keep in mind as you use a retirement calculator:
Tip #1- Retirement Calculators Can’t Totally Predict the Future. These calculators assume investment rates of return will be consistent, and that inflation rates will be consistent. The best way to use a calculator is to realize that there will be changing circumstances that will change the results, so use one yearly, always changing information to reflect current rates of return and inflation.
Tip #2- Use a Retirement Calculator as a ‘Tool’. Planning for retirement begins at the beginning of your working career, and calculators can help to show you ways to ‘catch up’ on lost investment time. Retirement calculators can be a tool to show you all facets of your retirement savings such as personal savings, investments, retirement plans, social security savings, and other assets that may be available as retirement savings (businesses sold for retirement income).
Tip #3- Retirement Calculators Help Illustrate the Concepts of Saving and Investing. There is no better way to quickly illustrate how your investment may increase in value over time. Retirement Calculators can help you determine if your monthly contributions are enough, or are too little. Calculators quickly show you anticipated results to making savings changes now, versus waiting twenty years to see if you saved enough or too little.
Tip #4- Retirement Calculators Show Retirement Savings Options. If you’re not utilizing all options available to you to save for retirement, many calculators show you what you’re missing. Input data into each line and if you don’t have that line item in your portfolio, you may be missing out!
Using a retirement calculator will provide results that suggest the amount that will be available to you in retirement if you continue to save. It’s up to you to continue saving, adjust your plan as needed, use a retirement calculator frequently, and meet with your advisor at least yearly.