Investing for retirement isn’t as big and tedious and undertaking as it is made out to be. The key is to define how much money you’ll need for the days after you retire and then draw out a plan to achieve your objective. To make things easier, begin by considering your lifestyle post retirement. Sources of income such as Social Security, IRA, etc. are also to be considered, but it is wrong to consider that these sources of income are enough for you!
If you are not sure on the investment, you can estimate your income by using a tool called as a retirement calculator. This is a tool that simplifies your retirement planning and is user friendly. This tool considers your age, current assets, sources of income, and how much you are willing to save every month. This tool helps to determine how much money you will be able to withdraw monthly post retirement. If this is not enough, you have the liberty to vary the parameters and run the scenarios to see how much more you can save.
The main thing to keep in mind regarding the retirement calculator is that the results produced by this tool are hypothetical and do not project any exact deal. The calculations or the output will be displayed based on the inputs given by you. The calculator is such a tool that saves you data and helps you revise your plan when needed
You need to remember
If you assume an automatic plan, you’ll invest the same amount of money on a regular basis over a specific time frame, regardless of price rise. This strategy helps you avoid trying to stage the market and enables you to benefit from the effects of compounding yields.
It’s important to review your plan frequently as it help keep your savings amount and investment decisions on track to meet your goals. If they’re not, you may need to upsurge your investments, re-balance your investments, or reconsider your outlooks for living in retirement.
Assumptions and limitations
All the amounts displayed are pre-taxed. The tool does not assume pension and other retirement income, hence, the data that you input is only considered at the time of calculation. It also does not consider the expenses such as long-term care, health care costs, education, and expenses post retirement. The inflation rate and salary growth rate is set to a default by the organizations offering the retirement calculator.