Retirement Calculators Help Make Decisions

Many folks are now postponing their retirement or even being forced to reenter the workforce, either to supplement diminished savings or because they underestimated how expensive retirement would be.

When determining what amount to allocate toward retirement, investors should look at their expenses and what they need and don’t need. “You should put in what you can afford maybe to the point of sacrificing other things. If you have a car that’s three years old, you don’t need the new car.

People might be reticent to put a more sizable amount into their 401(k) or IRA because they’re worried it will affect their lifestyle. “Once someone understands how before-tax contributions can affect their net pay, they are more likely to contribute toward a plan.

If you are wondering about the right time to retire, use retirement savings calculators to help determine how much to save  and determine how much will you need? Financial planners often suggest people may need 70 to 90 percent of pre-retirement income to maintain their current lifestyle, but individual circumstances make it hard to generalize.

For example, some folks downsize their housing or retire to less expensive areas and therefore may need less. Others can anticipate high medical bills or other heightened expenses.

Crunch the numbers. Start estimating your retirement needs by using online interactive calculators, including:  “Excel” journeymen know you can plug in numbers and get formula results from a spreadsheet. Lesser known, however, is the ability to figure out what numbers are needed to get a certain result, which works perfectly for retirement planning.

• Chief Excel Officer” Chandoo runs down how to use Excel’s Goal Seek feature to create a kind of retirement target advisor. You’ll fill out a spreadsheet with the financial status you seek to achieve by the time you’re ready to put your hammer down, and leave one cell as the variable that tells you how much you’ll have to set aside each week, month, or other time period to hit that big goal down the line.
• Goal Seek is useful in a number of other ways, of course, but the tutorial at Chadoo’s Pointy Haired Dilbert blog uses retirement savings as a relatable framework for understanding how Goal Seek should be used in your own quest to find the Xs in your future equations.

Excel Goal Seek Tutorial – Learn how to use goal seek feature by building a retirement calculator in Excel [Pointy Haired Dilbert: Charting & Excel Tips]

Social Security’s Retirement Estimator now automatically enters your own earnings information from its records to estimate your projected Social Security benefits under different scenarios, such as age at retirement, future earnings projections, etc. Find it at:  http://www.ssa.gov/estimator/ . They also have a more detailed calculator you can download to make more precise estimates.

AARP offers a calculator designed to help determine your current financial status and what you’ll need to save to meet your retirement needs (look for it at http://www.aarp.org/money/financial_planning under “Tools”).

Also remember that Social Security benefits may be taxable on federal income taxes, depending on your income level. Publication 915 at http://www.irs.gov has full details.

Use the 401(k) calculator at www.bankrate.com under the “Retirement” tab. They also provide calculators to estimate the impact of retirement plan contributions on your current take-home pay, minimum IRA distributions, and much more.