Forecasting Your Future Finances With A Retirement Planning Calculator
Wikipedia defines retirement as the point where a person stops employment completely. Semi-retirement is when hours of work are reduced. Early retirement is retirement before the age of eligibility for support from government or employer-funded sources is available, thus making early retirees rely on their own savings and investments to be self-supporting initially until such time they receive external support. The standard retirement age for employees varies for each country. Although some people are forced to retire due to physical disability or medical issues, most people opt to retire when they become eligible for public or private funds. The amount of money that you will be getting can be determined by using a retirement calculator. Most retirement calculating tools project how much an investor needs to save, and for how long, in order to reach a certain annuity.
What is a Retirement Calculator?
For most people, the thought of retirement elicits mixed emotions. An employee may look forward to it with anticipation and relish the thought of it. Yet for many people, thinking about retirement is an overwhelming and dreadful thought. According to the 2010 Retirement Confidence Survey conducted in the US, Americans’ self-described preparations for retirement continue to erode. What usually comes to mind are the questions, “Am I saving enough? When can I afford to stop working? How long will my savings last? How much retirement withdrawal of cash can I make every year?” A wise person would want to plan out well in advance what to do after retirement. Knowing how much payout you will be spending on a retirement pension plan, and how much annuities you will receive will help you plan out your life more effectively after retirement. With simulation of these online tools, you will be able to easily find within a few moments the exact amount that you will receive, just make sure to populate each row with the correct data to ensure accurate results.
A retirement calculator is a tool to help you plan your financial future so you can retire when and how you choose. Retirement calculators differ in calculations. Couples have different tax consequences and Social Security benefits from those of unmarried couples or those facing divorce. If you are in a relationship but not married, your partner’s information should be included in your calculations. Basic data that are needed to calculate your retirement savings are: Current Age, Current Savings, Desired Retirement Age, Desired Retirement Income, Age at which savings run out, Yearly Post-Tax Investment Return, and Expected Inflation.
There are many online sites with retirement calculators, and while they are more or less basically simple and the same, some may have variables such as:
>Current savings balance – this will determine how much you will saved for your retirement.
>Annual Retirement Income – this will help you determine how much will you need once to cover your expenses for whole year once you are retired.
>Annual Yield – this is the return of investment on all stocks that you have bought and may greatly vary as expected as the market is dynamic.
>Other Income – these are other sources of income after retirement.
>Inflation Rate – this is the expected annual inflation rate
>Current Tax Rate – this is your tax classification
>Retirement age – this is the age when you plan to retire or as a required by Social Security
>Retirement Tax Rate – this is your tax classification once you are retired
>Withdraw age – determines the number of years as to when you will need your annual income for retirement.
>Inflate Contributions – this variable would allow you to either increase your investment amount or stay equal with the amount of inflation.
Opting whether the annual contributions are tax sheltered or not will also make a difference. If you opt for yes, then your investment would be an account with IRA or 401k which is tax deferred. If not, your investments are subject to income tax annually. Below is a list of the best, good and poor retirement calculators that can be found online as reviewed by users:
Online Retirement Calculators
There are numerous retirement calculators that can be found online with some in Excel format.
Best Online Calculators
MSN Retirement Calculator
This is the simplest and most graphic calculator which allows you to enter projected income from a retirement job with results shown on one page.
What makes it different from most retirement calculators is that since it is capable of projecting your living standard over your lifetime, although it requires a detailed input.
FIRECalc Retirement Calculator
It requires the detailed input to create the accurate answer you need to plan your retirement. It then runs your plan through all of the 30 year cycles of the stock market since 1871 to see how many times your plan would succeed or fail in each of those cycles.
Motley Fool Retirement Calculator and Wallet Pop Retirement Calculator
It has the ability to specify when your income from a retirement job will end but requires very detailed input specifically assets.
Good online calculators include:
AARP Retirement Calculator
CNN Money Retirement Calculator
New Retirement Calculator
Retirement Jobs Online Retirement Calculator
Other online calculators found on the internet
American Funds Retirement Calculator
Bloomberg Retirement Calculator
Monte Carlo Retirement Calculator
Coast Capital Savings Credit Union Retirement Planner
Vanguard Retirement income calculator
Credit Union of Texas Retirement Calculator
Teachers’ Retirement System
Smart Retirement Investing Financial Calculator
Fidelity Retirement Calculator
USGS Retirement Estimator
TRowePrice or T Rowe Retirement Calculator
ING Retirement Calculator
Some of the free online retirement calculators that are being used by government
Wisconsin Retirement System
The California Public Employees’ Retirement System (Calpers)
Canadian Retirement Income Calculator
Civil Service Retirement Calculator
Oregon PERS Web Retirement Benefit Estimator
The New York State and Local Retirement System (NYS-LRS)
OPM – The Office of Personnel Management
Air Force (AF) Reserve Retirement Calculator
Army Guard Retirement Calculator
Retirement Calculator India
National Guard Retirement Calculator
Naval Retirement Calculator
(TRS) Teacher’s Retirement System of Texas
What is a Military Retirement Calculator?
This tool will help those in the USAF such as the Army, Marine Corps, Navy, Air Force and Coast Guard and Reserves and National Guard (including Army Reserves, Navy Reserves, Air Force Reserves, Marine Reserves and Air National Guard) to calculate the amount that they will receive once they retire. This amount would be based on the years that they spent in service depending on their retirement plan.
Although there are mainly 3 retirement plans that are available to military individuals, these plans are not really very different from one another, depending on some retirement policies of law enforcement agencies where the retirement age varies. The only main difference is the method of calculation and the initial premium that would be provided to them. These are: Final Pay, High 3 Year Average, and Redux.
Final Pay Plan
applicable to individuals who joined the army before September 8, 1980 >served at an active duty for at least twenty years
basic variables to enter into the military retirement calculator are
age of an individual
number of active years at the army
The calculator will display the amount that will be received after retirement but may also take into consideration tax rate, inflation and other variables. Generally, the number of variables is limited to the three that are listed above.
High3 Year Average Plan
applicable to individuals that joined the army after September 8, 1980
served at an active duty for at least twenty years
basic variables to enter are:
age of an individual
number of active years at the army
The difference between High-3 Year Average Plan from Final Pay is that the average base pay for those 36 months that paid the highest base pay is being used.
applicable to individuals that joined the army after August 1, 1986
served at an active duty for at least twenty years
Under this plan, a one-time fixed premium of $30,000 is also keyed into the calculator. A particular calculator was developed by CNS in 2009 as part of their Retirement Choice study, allowing future retirees who joined the military after July 31, 1986, to determine how much they would earn under two competing retirement plans High-3 plan, which bases retirement pay on the highest average basic pay for three years of a career, or the REDUX plan, which provides a $30,000 upfront bonus with smaller retirement checks over time.
Concurrent Retirement and Disability or CRDP qualifies a disabled military retiree for getting paid for both their full military retirement pay and their VA disability compensation.
Other provisions under the Divorce and Military Retirement Plan includes The Uniformed Services Former Spouses’ Protection Act where it says that if the marriage had lasted more than ten years, the Defense Finance and Accounting Service or the DFAS would directly pay the spouse his/her share of the military retirement plan. If it lasts less than ten years, the spouse who was in the military will have to pay the divorcee the sum from the military retirement plan.
Department of Defense (DoD) has a new plan to overhaul the retirement system to benefit all troops with a corporate-style benefits program that would contribute money to troops’ retirement savings instead of a future monthly pension.
(CSRS) Civil Service Retirement System or (FERS) Federal Retirement Calculator
The CSRS or Civil Service Retirement System began in 1920 and has provided disability, survivor and retirement benefits to the majority of civilian employees in the Federal government until the year 1987, when the new Federal Employees Retirement System or FERS was created. Today, over two million people carry on receiving Civil Service Retirement System retirement and survivor benefits every month.
These benefits are financed by contributions of both Government and employee to the retirement fund based on the duration of service and the average pay of the employee over the highest 3 years of pay.
By law, any employee is qualified to retire voluntarily if the following provisions are met:
at least five years of creditable civilian service
is separated from a position subject to Civil Service Retirement System coverage
is covered by Civil Service Retirement System for at least one year within the two-year period immediately preceding the separation
and meets age or service combinations of age 55 with 30 years of service; or age 60 with 20 years of service; or age 62 with five years of service.
Employees who separated from service and are not able to meet the criteria except for the age/service combination may be permitted to a deferred annuity at age sixty-two. An employee must not take a refund of retirement deductions upon separation in order to be qualified.
However, there are factors that determine the employee’s eligibility for retirement under the Civil Service Retirement Systems and is not restricted to service in positions subject to CSRS retirement deductions. Temporary appointment is not also subject to retirement deductions as well as an honorable active military service which is subject to conditions that:
>it was executed before the separation date upon which is the basis for entitlement to annuity
>it is not comprised in computation of military retired pay except for certain service-connected disability requirements
>if the military service was executed after December 31, 1956; In which case, some employees will have to create a deposit for the service to receive firstly or for other employees, to retain credit after the age of 62.
Although the service used in determining an employee’s eligibility for retirement is typically the same as creditable service for computation purposes, one of the exemptions is if periods of CSRS service are refunded. It will not be creditable unless a redeposit is made.
Eligibility for a Special Retirement Supplement will qualify you if you retire:
After the Minimum Retirement Age or MRA with 30 years of service
At the age of 60 with 20 years of service or
Upon involuntary or early voluntary retirement at the age of 50 with 20 years of service, or at any age with 25 years of service on the following situations: after the U.S. Office of Personnel Management determines that your agency is undergoing a major reorganization or a reduction-in-force (RIF) or transfer of function.
While in California, if you worked for a federal, State or local government where you did not pay Social Security taxes, the pension you receive from that agency could offset your Social Security benefits.
T Rowe Price Retirement Calculator
Despite the countless retirement calculators online, some calculators are distinct in its features. Take for example the T Rowe Price Retirement Calculator which appears to be a sales tool rather than a true calculator. It asks seven questions and then gives you the results.
According to reviews from the site bestretirementcalculators, this calculator is misleading on the following points:
1. Question #4 or the Retirement Assets is only requesting tax deferred assets, but you must click the link by the question to discover this fact.
2.Question #5 or the Monthly Income Goal is asking for only the income expected from the investments entered in question #4. It is not asking for income from pensions, social security, or other outside sources, thus the results will be extremely inaccurate.
Top Features To Look For In A Retirement Savings Calculator To Help You In Planning Savings And Income
Despite a host of retirement savings calculators that can be found on Internet sites, one should be vigilant and careful about choosing the best calculator that would aid you in planning your retirement accurately. This is because some calculators are sponsored by companies who only want to take advantage of your lack of knowledge and cannot meet the services that the clients want from them. Other companies present information that we need to know but they fail to give you the true and the real meaning of that certain information that you need.
It is therefore important that your retirement saving calculator is the one that can give you these following data:
>Social security information
This is very important because this will become the basis of your plan. Information for both you as the retiree and your spouse must be present in all planning that will be done during the early start.
This must be clearly elaborated so that you will be able to make the necessary planning on your finances.
You should come up with a rough estimate and not just a default number that will be used in the calculations all throughout.
Post retirement funds and lump sums such as amounts from sale of a home, inheritance or any other property.