How To Use A Retirement Calculator?

Answer 1

For non-investors, retirement planning is often a quagmire of doubt and confusion. How much do you need for retirement? When should you start putting money away? At what age can you retire? Hundreds of retirement calculators further complicate the matter. Each one is built on a different set of assumptions, and each one provides different answers. So, how can you use these tools to find good, solid answers to your retirement questions?

Finding the best retirement calculators

Not all retirement calculators are created equal. Some only take minutes to spew out an answer; others take a little more time. Keep in mind that the information you receive is only as good as the information you give, so choose calculators that are versatile and require some level of detail. The result is a much more accurate answer that can help you begin working toward your retirement goals. CNNMoney.com rates the retirement calculator at www.basic.esplanner.com as the top site in a list of the 20 best money websites. The calculator is free, but requires about 30 minutes to complete. If you prefer to invest a little less time, the calculators available at www.aarp.org and www.CNNMoney.com are worth a try.

Try several calculators

Do a search for retirement calculators and the result is a plethora of options. Try several calculators to get an idea of how each one works. Each one may give you an additional tool in your retirement planning arsenal. Many provide interesting insights into retirement planning. For example, FIRECalc� at www.firecalc.com tests the data you submit by running it through scenarios based on actual market cycles since the 1800s.

Look at underlying assumptions

The types of questions a calculator asks are very important because they reveal some of the underlying assumptions of a particular calculator. In your search for the best retirement calculators, you will soon begin to notice that most calculators ask for your age, current income and the current amount of savings in your 401(k) or IRA. Some calculators assume that you will never get a raise or increase your deductions, which does not provide you with information of much use. The Motley Fool retirement calculator by LeadFusion is a calculator that requires detailed input and provides some good data in return.

Start saving

The most important step in using retirement calculators is to put what you learn into practice. If you see that you are only putting away half of your optimal savings amount, try your best to funnel more of your income into your retirement account. The sooner you start, the better.

Use a retirement calculator to find out what percentage of your income you should put into savings and change your 401(k) or IRA contributions as soon as possible. That way, as your income grows, your retirement savings grows too.

With a world of retirement planning resources at your fingertips, you can discover the answers to your retirement questions. However, do not forget the importance of taking action. No matter how much your retirement calculator tells you that you need for retirement, you can only achieve your retirement goals by making some sacrifices and tough decisions when it comes to planning for the future.

Answer 2

On a regular basis, thousands of people access a retirement calculator from one source or another. These calculators are designed to help a person save enough money for retirement. A few simple calculations can tell a person how much money they must save over a certain period of time. Undoubtedly, these tools will help anyone save for retirement in the most efficient way possible.

The average calculator takes a few tidbits of information to determine a person's retirement savings needs. For starters, an individual will need to designate how much money they want to retire with and at what age. Any savings accounts or individual retirement accounts will need to be inputted with their balances and interest rates. Afterward, a retirement calculator will yield some key information, which a person must utilize for their own goals.

In most cases, such calculators show a person exactly how much money they need to save to meet their retirement goals. Advanced calculators may break down necessary contributions on a daily, monthly, or annual basis. Some programs even give a person tips on how to maximize their savings or recommend better savings products. Without a doubt, this information should be taken seriously and used for effective retirement savings.

Using a retirement calculator is only the first step though. Obviously, information calculated by these programs does not matter if an individual fails to actually save the money. Creating a plan to make contributions and then proceeding along that plan is necessary. Otherwise, a person is simply wasting their time and effort along with hurting their chances of retiring comfortably. Typically, the average person does not want to work for their entire life and never retire comfortably at some point.

A lot of great retirement calculators are available for free use. For that reason, an individual should absolutely take advantage of these offerings. How a person uses this information for their own savings needs is the most important factor though. Too many people use these calculators and then do nothing with the information. In the end, retirement savings is more than necessary these days, so a person should not skip out on such an opportunity.

Answer 3

Planning for retirement is certainly not an easy undertaking. There are so many variables to contend with such as tax rates, inflation rates, the average rate of return on investments and more. In addition to making adjustments in your calculations for these variables, you may also review your retirement account balances periodically to determine if you are on track with your efforts. In reviewing your account balances, you have to adjust your planning efforts to take into account current account balances. A retirement calculator is a great tool that you can use regularly to make retirement planning easier.

Different Types of Calculators

You can do a quick internet search for retirement calculators and discover that there are dozens of different calculators to choose from. If you search for more specific types of calculators, such as an IRA or 401k calculator, you will find a wider range of options. While there are many to choose from, you may only need to select one or two to use on a regular basis. You may choose to use a basic calculator for simple, periodic calculations. A more complex factor that takes into account the current balance of all of your accounts, the rate of return on your investments, adjustments for salary increases and more may be used less frequently. Finding a great calculator or two to use can be difficult, but you will find that the effort is well worthwhile. You likely will return to use your favorite calculators repeatedly.

Making Adjustments

After reviewing the progress you have made toward saving for retirement periodically, you may consider making adjustments to your retirement efforts. Each time you use a retirement calculator, you may get slightly different results. These calculators may take into account your age, average interest rates on CDs, your account balances on any given day and more. These are all factors that will change. Before making any adjustments to your retirement efforts, consider waiting a few weeks or even months. Fluctuations in the market may make your retirement plans seem off-track, but those fluctuations may even themselves out and put your plans right back on track without any adjustments needed.