Financial Calculators
Retirement Calculator

# Retirement Calculator

Retirement savings calculator that uses the formula FV = PV (1 + R)ⁿ to help users plan for retirement and calculate retirement income.

Result

$553,407 at Age 65 Savings Needed at 65:$1,516,653

Equivalent Purchase Power Now: $624,841 Lifestyle after Retirement:$55,198

You will have

You will need

MONTHLY INCOME AFTER RETIREMENT (IF SAVED $553,407): ACTUAL AMOUNT TODAY'S MONEY Total$4,600 $1,895 From Savings$3,100 $1,277 From Social Security$1,200 $494 From Other Income$300 $124 MONTHLY INCOME AFTER RETIREMENT (IF SAVED$1,516,653):
ACTUAL AMOUNT TODAY'S MONEY
Total $9,911$4,083
From Savings $8,411$3,465
From Social Security $1,200$494
From Other Income $300$124
IF YOU SAVE EVERY MONTH UNTIL 65
Amount to Save Every Month $644.11 Total Principal$261,880.23
Total Interest $538,119.77 IF YOU SAVE EVERY YEAR UNTIL 65 Amount to Save Every Year$7,939.66
Total Principal $268,189.86 Total Interest$531,810.14
IF YOU HAVE IT NOW
Additional Amount Needed $109,288.10 Total Principal$139,288.10
Total Interest $660,711.90 Result Balance at the retirement age of 65$646,653.85
Equivalent to current purchase power of $266,412.83 The amount you can withdraw monthly at 65 and increase 3% annually$3,573.24
Equivalent to current purchase power of $1,472.13 The amount you can withdraw monthly from 65 to 85$4,573.73
At age 65, equivalent to current purchase power of $1,884.32 At age 85, equivalent to current purchase power of$1,043.30

Result

If withdraw $5,000 per month,$600,000 can last 15 years and 0.7 months.
WITHDRAW LENGTH WITHDRAW AMOUNT
5 years $11,555.39/month 10 years$6,613.44/month
15 years $5,011.76/month 20 years$4,243.75/month
25 years $3,807.73/month 30 years$3,536.22/month

## Understanding the Retirement Investment Growth Formula

While there are many different retirement calculations, determining how much your investment will grow by the time you retire is the most important. The calculation itself is a simple future value calculation.

The initial investment formula is:

$$FV = PV (1 + R)^n$$

• FV = Future Value of your retirement account (including all interest)
• PV = Present Value of your retirement account (plus any additional contributions)
• R = Interest or Growth Rate
• n = Number of periods (typically calculated in years)

The number of years that you have until retirement will greatly influence your total retirement savings since money compounds over time. You can use the formula above to calculate growth in a single year. However, most people plan for retirement over several decades.

You'll need to run this calculation for each year individually and add them together. The formula to calculate basic investment growth is:

$$FV = PV (1 + R)^{n} + PV (1 + R)^{n-1} + PV (1 + R)^{n-2}…. etc.$$

If you are saving for retirement over 30 years, you will repeat the formula 30 times. As you can see, this calculation is too complex to do manually.

## Retirement Account Withdrawals

The formula to calculate how withdrawals impact your retirement account works similarly, just in reverse. Instead of adding contributions to each period's present value, you subtract the withdrawals. For example, the formula to calculate retirement account growth with withdrawals is:

$$FV = (PV - W) × (1 + R)^n$$

W, in this case, equals the withdrawal amount.

Note: Your retirement account can continue growing even with withdrawals. Your account balance will increase as long as your total return is higher than the amount you withdraw.

## How to Use the Retirement Calculator

Our free retirement calculator makes analyzing your retirement planning easy. With a few simple data points, you can quickly find out if your current efforts will help you reach your retirement goals.

Step 1: Select the right calculator option - There are four separate calculators depending on which of the following questions you want to answer:

• How much do you need to retire?
• How much can you save for retirement?
• How much can you withdraw after retirement?
• How long will your money last in retirement?

Step 2: Enter the Information Requested - Some information, such as your current retirement savings amount, will be readily available. However, you will have to make some assumptions (for example, your life expectancy). When planning for retirement, it's always best to be conservative when you don't know the answers to specific questions.

Step 3: Click "Calculate" and Review Results - Each calculator will return different results to help you answer the questions above. Feel free to adjust the numbers to see how they impact the results.

## Real Example

Let's say you are planning for retirement and want to know if you are saving enough to cover your living expenses. Your monthly expenses are currently $10,000 per month. Currently, you are 35 years old and plan to work until you are 65 (with a life expectancy of 85). You already have$100,000 saved for retirement. And currently contribute $250 per month (with no other contributions during the year). The investments you have selected average 10% growth each year. You're expecting inflation to remain at approximately 3%. To run this calculation, select the "How much can you withdraw after retirement" calculator and enter the following information: • Your age now: 35 • Your Planned Retirement Age: 65 • Your Life Expectancy: 85 • Your Retirement Savings Today:$100,000
• Annual Contribution: $0 • Monthly Contribution:$250
• Average Investment Return: 10%
• Inflation Rate: 3%

Once you hit the Calculate button, you’ll see that you will be able to withdraw $21,174 per month in retirement. While this amount exceeds your currency expenses, you have to factor in inflation. The calculator shows that the current purchasing power of this amount is equal to$8,723 today, just short of the \$10,000 needed. To meet your goal, you will have to increase your savings rate.

## Key Benefits and Helpful Tips

Saving for retirement is essential to living a comfortable life when you are older. Proper planning requires tools like this calculator to understand how your investments will grow. Here are some key benefits and tips for using our retirement calculator.

### Key Benefits:

• No Memorizing Formulas - Accuracy is critical when calculating your investments and planning for retirement. This calculator helps you avoid memorizing formulas or complicated manual calculations.

• Calculator Options - Most retirement calculators only calculate the growth of investments over time. This retirement savings calculator allows you to run multiple scenarios and fully evaluate your retirement options.