Understanding your retirement income can help you build a better budget and determine whether you should save more. Once you complete the following sections, you’ll see an estimated yearly breakdown of your retirement income based on your entries.
Personal
To calculate your retirement income, we ask for several key pieces of information about your current situation, including:
- Current age: Your age tells us how long you have to save for retirement. The younger you are, the more you can save in the long run.
- Annual income (before taxes): Your gross annual income will help the monthly retirement income calculator predict how much of your income can be used for retirement savings.
- Age at retirement: The age of your retirement compared to your current age tells us how many years you have left to save.
- Monthly wages during retirement: Your monthly wages during retirement depend on various factors, such as your current savings and Social Security benefits.
Projections
Projections help the monthly retirement income calculator plan for the future by telling us your life expectancy and estimating the cost of living.
- Life expectancy: The calculator must ensure you have a monthly income for the remainder of your life after retirement. Setting a life expectancy will tell us how many months we should calculate.
- Initial living expenses: Your initial living expenses include all the things you pay for now, such as your mortgage or rent payments, electricity and gas bills and groceries.
- Intermediate living expenses: Your intermediate living expenses account for financial changes in your life, which may cause your total cost of living to increase in the short term.
- Remainder of retirement: The remainder of your retirement tells the retirement payout calculator how much more you’ll need for your retirement, which takes into account various factors, like how you’ll spend your money. For instance, if you want to travel more, you can add those expenses here to help us calculate your total costs.
Benefits & Pensions
There are various sources of retirement income you should factor in to determine how much you’ll earn in retirement, including Social Security benefits and your pension:
- Age you will claim Social Security benefits: You can begin collecting Social Security benefits at the age of 62. However, the longer you wait, the more your benefits will be worth.
- Monthly pension payment: A pension is an employee benefit in which the employer makes contributions. It’s similar to a 401(k) in that it’s an employer-sponsored retirement plan. Not everyone has a pension, so if you don’t have one, you can leave this field blank.
Tax-Advantaged Savings
Retirement savings accounts may be provided by your employer or require you to get one yourself. In any case, there are several tax advantages that allow you to either defer payments or pay now and be exempt from taxes in the future.
- Type of account: Tax-advantaged retirement savings accounts allow you to either contribute pre-tax dollars to your account and defer taxes or contribute post-tax payments and avoid potentially higher taxes when you retire. Some common types of tax-advantaged savings accounts are 401(k) or IRAs with tax deferral benefits.
Other Savings
Most people have additional savings accounts they use besides their retirement accounts. Once you retire, you can use any of your savings and investments as retirement income.
- Accounts: Your accounts refer to any funds in your bank account that you’ll use as retirement income.
- One-time investments: You can include one-time investments like stocks, bonds and certificates of deposit (CDs) as retirement income. You’ll just need to provide the investment amounts, rate of return and years until you invest.