Retirement planner

Use this tool to help plan your finances for retirement

How much do you need to retire in comfort? A standard rule-of-thumb suggests that retirees need an income equaling 75 percent of their pre-retirement take-home pay. Hopefully, they meet that figure through some combination of a pension, Social Security funds and personal savings. But you may prefer to work this through from your personal vantage point. Take a look at your life now, and what it costs in cold cash — not what you make, but what your real expenses are. Now, think about how you hope and expect to live after retirement. You'll see that some of your current costs disappear — the kids are grown; the mortgage is paid off; the suits are in mothballs. Maybe you're moving to a warmer climate, so forget the heating bills. But your new lifestyle brings other costs with it. Hey, it takes money to sail to Fiji... So, take your pick of these two retirement planning calculations, or use both and compare the results. Then, go to Part 2 to figure out how to get there.
Part 1: What will it cost?
The traditional formula:
Enter your current annual after-tax income: $

The personal formula:
Enter your current annual living costs: $ Now, think of the living costs you have now that should disappear by the time you retire. These expenses will be subtracted from your current costs.
Pre-retirement expense TOTAL:		Estimated annual cost $ $ $ $ $ $
Next, think of the new costs you may acquire as a retiree.
Retirement expense TOTAL:		Estimated annual cost $ $ $ $ $ $

Now, we'll determine how much you need to save to get there.
Part 2: How do I get there?
The above figure estimates the income you'll need to retire comfortably. Now, consider whether you expect to have pension income, and whether you are counting on Social Security to provide supplemental income. As you may be aware, many experts believe that future Social Security benefits are in jeopardy if the program is not reformed in the near future. This is one of the issues you might consider here. The annual retirement expenses you estimated are: $ Enter your annual expected pension income, if any: $ Enter your expected annual Social Security benefit: $ The big question is literally the bottom line: What is the dollar total I need to save in order to live comfortably in the future? Many complex formulas are used to reach that figure, and only you--and your financial adviser, hopefully--can choose one. Just to get you started, here's one formula that is very ambitious but very safe, even if you live to 140. (Some retirement formulas ask you to estimate how long you will live. That question gives us the creeps.)