What will your retirement fund look like when it’s time to leave the work force? Will you have enough money saved up for the golden years? How much should you be saving each month to ensure that you’ve got a nice financial cushion at retirement?
Answering these questions can be done easily with the use of a retirement calculator, which doesn’t necessarily have to be utilized in your 50s and 60s. In fact, it’s wise to make use of such a tool when you are in your 20s or 30s in order to get a head start on saving enough funds for retirement.
A retirement calculator can help you to figure out how much you’ll need for retirement.Start Saving For Retirement Early to Take Advantage of Compounded Earnings
The earlier you start saving for retirement, the longer compounding can work in your favor. For instance, a 20 year-old person who starts putting away $200 per month towards a retirement plan until the age of 65 can accumulate approximately $550,000 after earning 6% in interest. However, waiting until the age of 45 to start saving using the same figures will only generate $138,600 by retirement age.
Calculators Can Help Get Your Retirement Savings on Track
Using a retirement calculator early in life can provide you with the financial information necessary to help you determine what you need to do to save enough for retirement. It can help you answer a number of important questions when creating your retirement plan. Are saving enough? At what age can you afford to stop working? How long will your money last after you retire? All these questions – and more – can be answered with the use of a retirement calculator, which ideally should be used as soon as you start your career early on.
Which Retirement Calculator Should You Use?
There are a ton of online calculators circulating in the internet that you can use to help estimate whether you’re on track to saving adequately for retirement. Some may ask for a number of intricate details in order for the calculator to provide a more accurate answer, such as rates of return on your retirement savings, future rates of inflation, and so forth. However, many calculators are a little more simplistic, and make assumptions on your behalf, considering how difficult some of these questions can be to answer.
Will you have enough money to enjoy a secure retirement?When choosing a retirement calculator, make sure the one you use shows its default assumptions, and makes it simple for you to change them. Since the results can vary based on the various assumptions across different online calculators, you’d be well advised to use three or four different calculators and compare their results. Understand the assumptions and methodology of each calculator to figure out the reasons for such differences.
Retirement Calculators Are Not Meant for One-Time Usage
Calculations should be revisited every two or three years to make sure that you are on track with your savings, as well as to factor in any major financial changes that may have occurred. The new answers you get might reflect how your investments have been performing since the last time you used the calculator. This will also give you a chance to refine some of the assumptions made, since you’ll be a little closer to retirement at that point.
You don’t have to be a financial guru to figure out your options when it comes to saving for retirement. With online calculators, the answers are at your fingertips.
