Calculating what you need for retirement
KJ: We’re on a bit of a kick with regards to looking at what we need to save for the future, and the age old question of Am I on track?. Do you know what you need to be saving?
Okay, so no, we did not spend countless hours and thousands of dollars on building our own retirement planning calculator, but why bother? With lots of free tools available to help (some much better than others), we wanted to share one we stumbled across that has a decent amount of options:
Don’t Get Discouraged: Find a Way to Get on Track
Sure, especially for a young person, there can be a number of items that don’t pan out like planned (maybe you have to make a career choice – or two – to make less in order to do something more fulfilling or less stressful). Maybe your children end up costing you a little more than planned and you can’t quite save what you had hoped. No system is perfect, but periodically stopping to do a gut check on your current situation is always a good idea. Plug in the numbers and see if you’re where you need to be. If not, figure out how to get there by cutting your expenses and increasing your savings. Not only does cutting your expenses reduce the need later on, but you’re also simultaneously increasing your savings by nature of having fewer expenses – so learn to live beneath your means – win-win!
Don’t Count on Social Security
For those of us with a long time horizon, when plugging in the numbers, see about excluding Social Security. If (and that’s a big if) it’s still there by the time we get to retirement, it’s likely to be quite a bit different than it is today, so the last thing you should do is plan for that uncertain piece as a requirement for your goals to succeed.
Not a substitute for solid advice
These free charts are not a substitute for good, sound advice, but they at least help you start to “what-if” until your heart is content. Also, these charts can be lacking in that it just does a simple calculation of return each year (i.e. the investment return numbers you use are used year after year – an impossibility!). In fact, you’re likely to experience quite varied returns each year +5%, -5%, +8%, +6%, -2%, etc. to actually achieve your “target” return. However, this simple calculation is better than not planning ahead, so start clicking around and see what your results come up with. If it predicts doomsday scenarios, then look at what you can do to cut those expenses even further and right the ship now – the sooner the better! If it seems like you’re too far off track or maybe you are on track, but need help managing what you’ve built, then consider visiting the Financial Planning Association (FPA) planner search tool to find someone in your area that can help.
- What do your results show?
Are you on track or have you side-stepped a little bit?
Tell us about how you see that you are on track.
Some of the links in the post above may be affiliate links. This means if you click on the link and purchase the item, we will receive an affiliate commission. We feel strongly about only recommending products or services we use personally and/or believe will add value to you, our readers. Read more about our commitment to providing quality product recommendations.