With the help of the retirement countdown calculator, you should be able to work out your expected post-retirement income and the possible expenses you could incur. With these figures in front of you, you should be able to assess exactly what steps you need to take to improve them. The steps you take now will help you ensure that you have a comfortable standard of living in your retirement years. Here’s what you need to do.
Use the Retirement Countdown Calculator to Evaluate Income
Your base retirement income is composed of three parts:
- Pension revenue
- Social Security income
- Income that your financial savings will generate.
You can be fairly confident that the pension revenue and Social Security income will remain steady. But, you need plan for any possible discrepancies between the amount you estimate you’ll receive and the amount you actually do get from the savings and investments you make.
To get a better estimate of what you’ll earn, here’s what you need to do:
- Check with your company for the pension strategy they have for employees and make estimations on the benefits you’ll receive.
- Visit the Social Security Administration website. They have a simple tool which will help you gauge the income you can expect.
- Plan your total retirement financial savings five years down the road. Factor in the interest you’ll earn on these savings also.
- Now total these for the annual retirement income.
Here’s a hypothetical example of this test strategy for retirement made with the help of a retirement calculator site. Bill is planning for his retirement and these are his income sources:
- Pension = $12,000
- Social security = $13,000
- Retirement savings = $12,500 (5% of $250,000) for an estimated total retirement revenue of $37,000.
- Total = $37,500
Use the Retirement Countdown Calculator to Evaluate Expenses
Add the total of the annual expenses by using a retirement calculator site just as you incur them now.
- Housing (rent, RE taxes, home loan)
- Utilities (phone, electricity, gas, oil)
- Transportation (insurance coverage, gas, repair, substitute)
- Clothing and taxes (10% of income)
- Entertainment (dinners, movies, pocket change, etc)
All of these are your essential living expenses. Total them.
To go with the earlier example, here are Bill’s expenses:
- Non-discretionary yearly expenses (Housing) = $5,000
- Utilities = $4,200
- Transportation = $5,600
- Taxes = $3,700
- Total Essentials = $18,500
Add to this figure other expenses such as: Entertainment at $40 a day = $16,000
Next Bill needs to estimate the amount he’ll have left over for travel and vacations.
Total Income = $37,500
Total Expenses = $34,500
Difference = $3,000
According to the calculations made so far, Bill is left with $3,000 for vacations, travels, and any other incidentals.
Using the retirement countdown calculator, you can make changes to your expected expenses. The figures you get will help you see just how much more you need to save and invest so you can make up for any shortfalls.
|Plan for Retirement|
By modifying his expenses on the retirement countdown calculator, Bill estimates that he will need an added $2,500 to cover his additional expenses. The next step Bill needs to take is to make changes in his lifestyle and current expenses. This will help him put aside more money for all the activities he has planned for his retirement years.
Possible Steps to Take to Raise Future Income
Now that you have a clear view of your expected income and expenses, here are some possible changes you can make.
- Make drastic changes in your present expenses. This will help you enhance your resources
- Plan on taking part-time jobs during retirement.
- Assess expenses that can be curtailed and cut back on them.
- Move to a residential arrangement that’s easier on the pocket.
- Check with the savings plan your employer has for you. See of your can contribute to it. And, ask about the amount you need to contribute so your employer is likely to match it. Also, assess the time for which you need to keep adding to the plan.
- Invest your money in varied channels. This will help you diversify your risk. You can also expect to get better returns.
- Make it a point not to withdraw money from your retirement savings. Aside from the principal and interest you lose, you could also lose out on tax benefits. In addition, you could incur penalties for early withdrawal. Also, keep in mind that the longer you delay, your savings will grow more.
- You can add up to $5,500 every year into your Individual Retirement Account or the IRA. If you are already 50 years of age, you can add more. Having an IRA or Roth IRA account entitles you to many tax benefits. You can also set up a system by which the savings amount you have specified is deducted automatically from your bank account.
Figuring out how to tailor your retirement plan with the help of a retirement countdown calculator site is a great idea. You can determine the amount you need to conserve and save for retirement. The figures you see will also help you evaluate the changes you need to make in your present lifestyle. These will include the place where you live and the expenditure you’re accustomed to. Whatever changes you make today will help streamline your transition into retirement without you having to make any drastic cuts in your living standards later.