What's required in a basic retirement calculator? I found that crucial and significant parameters are often ignored.
The parameters required for a basic retirement pension calculator are:
But then it should also take into account the possible future liquidation of some of your assets. It needs to adjust for inflation and the ever present greed of the tax man.
In my opinion a pretty good basic retirement savings calculator is offered by Kiplinger. When you click on the hyperlink the calculator opens in a new window.
It starts by looking at your current gross income, the number of years until your retirement, and the percentage of current income you would expect during retirement.
Next it factors in the Retirement income you will receive from Pensions and Social Security.
It then takes note of the savings you have already accumulated and how much equity you would be able to free up by selling your house if you wish to do so.
It ends by getting your opinion on your expected years of retirement, your risk tolerance, and any additional assets expected at retirement.
When you click on 'Calculate', go to the top of the page to see your results.
On the last line of the 'Results' section you'll get the estimate on how much you should save monthly towards your retirement savings account.
Play around with this basic retirement calculator, but be sure to move on to a real retirement income planner. Do not rely on the results from this calculator to make financial decisions.
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