Retirement is something that most of us will have to experience at some point in our lives. While most of us would prefer a comfortable life in our golden years, the time required and the complexity involved in developing and building a successful retirement plan, can make the entire process seem challenging and intimidating. On the other hand, retirement planning can also be done with as little pain and frustration as possible, all it really takes is a little homework, an achievable investment and savings plan, and a long-term commitment.
Getting Help from Retirement Calculators
To evaluate and determine how much money needs to be set aside, you must first ask yourself this question: what standard of living am I looking to maintain after my retirement, and how much would it cost me to fund that standard?
Planning can get even more tough when factors such as, care for elderly parents, children's education, health costs, etc., are taken into consideration.
This is where the retirement tool comes into play. This calculator will help you experiment with different retirement ages, amount of savings, and even different spending habits. By using a calculator to run these 'experiments', you will find out the benefits and costs involved in different scenarios.
Advantages and Disadvantages of This Tool
These calculators can provide you with useful information when it comes to making choices about different retirement options. However, they are not 'smart' tools, and are simply there to provide information that can help you make good choices.
The calculator will ask for information regarding your desired retirement age, expected savings, and annual expenses that you plan on incurring during your retirement. It will then use this information with certain assumptions, like taxes, inflation, and portfolio performance, to determine the necessary savings required for that plan. The tool also indicates a success rate for your proposed plan. If the success rate is 50%, then you have a 50/50 chance of saving enough money for your retirement. On the other hand, if it is 80% or above, then your plan is probably strong enough to cover your expenses.
Remember that time is of utmost importance here, and now that you are ready, start with the planning as soon as possible.