Retirement Calculator
Retirement Calculator
Retirement Calculator
Retirement is the point where a person stops employment completely. Today, retirement with a pension is considered a right of the worker in many societies, and hard ideological, social, cultural and political battles have been fought over whether this is a right. The retirement age varies from country to country but it is generally between 55 and 70. In some countries this age is different for males and females.
There are many factors affecting to a person for taking decision towards retirement. Some of these are like social security, financial incentives, wealth and spouse's employment status. Retired workers then support themselves either through pensions or savings. In most cases the money is provided by the government, but sometimes granted only by private subscriptions to mutual funds. The financial weight of provision of pensions on a government's budget is often heavy and is the reason for political debates about the retirement age. The state might be interested in a later retirement age for economic reasons. The cost of health care in retirement is large, because people tend to be ill more frequently in later life.
On a personal level, the rising cost of living during retirement is a serious concern to many older adults. Retirement calculator helps you to estimate how well your savings program is preparing you for retirement. A useful and straightforward calculation can be done if we assume that interest, after expenses, taxes and inflation is zero. Assume that in real (after-inflation) terms, your salary never changes during your w years of working life. During your p years of pension, you have a living standard which costs a replacement ratio R times as much as your living standard in your working life. Your working life living standard is your salary less the proportion of salary Z that you need to save. Calculations are per unit salary, e.g. assume salary =1.
Then after w years' work, retirement age accumulated savings= wZ. To pay for pension for p years, necessary savings at retirement=Rp(1-Z)
Equate these: wZ=Rp(1-Z) and solve to give z= Rp/ (w + Rp). For example, if w=35, p=30 and R=0.65 we find that we need to save a proportion z=35.78% of our salary.
Retirement calculators generally accumulate a proportion of salary up to retirement age, as illustrated in the clickable 'nut accumulation' example on the left. This shows a straightforward case which nonetheless could be practically useful for optimistic people hoping to work for only as long as they are likely to be retired: more information about this is at retirement.
For more complicated situations, there are several online retirement calculators on the Internet. Many retirement calculators project how much an investor needs to save, and for how long, to provide a certain level of retirement expenditures. Some retirement calculators, appropriate for safe investments, assume a constant, unvarying rate of return. Monte Carlo retirement calculators take volatility into account, and project the probability that a particular plan of retirement savings, investments and expenditures will outlast the retiree. Retirement calculators vary in the extent to which they take taxes, social security, pensions, and other sources of retirement income and expenditures into account.
The assumptions keyed into a retirement calculator are critical. One of the most important assumptions is the assumed rate of real (after inflation) investment return.
For more information on Retirement Calculator you can visit our website http://insuremegenie.com/Calculator/Calci_Retirement.aspx
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