The variables used in our online calculator are defined in detail below, including how to interpret the results.
This is your current age, stated in years.
Your current plans include retiring at this age.
This is your life expectancy when you reach your estimated retirement age. People mistakenly believe that life expectancies are in the range of 75 years of age. However, that figure applies only at birth. For example, at age 65, the average life expectancy is 83 years of age. Financial planning experts often use an even more conservative estimate of age 90 or 95.
This is your current annual household income.
This is your planned annual rate of savings. For example, an individual making €50,000 per year with a savings rate of 10%, would be saving €5,000 per year towards retirement.
This is your anticipated annual growth rate for your household income. For instance, if you expect to receive annual salary raises of 3.0% per year, then the growth rate is also 3.0%.
The desired income replacement rate is the percentage of your household's annual income that you want to replace in your retirement years. In retirement, many of your expenses should be lower. For example, you probably would have paid off a mortgage, and your work-related travel expenses will no longer apply. For that reason, many financial planners recommend that your retirement income replace approximately 70 to 80% of your pre-retirement income.
If you currently have retirement assets in a retirement savings account, then enter the totals of all those funds here. If you have not yet opened any of these types of retirement accounts, then you can simply enter zero.
The pre-retirement return on investments is the annual rate of return you expect to realize on all of your retirement investments prior to retiring.
The post-retirement return on investment is the annual rate of return you expect to realize on all of your retirement investments after you retire.
If your employer provides you with a pension plan, or you have another source of retirement income, then enter that value here.
If you expect the Social Security system to provide you with retirement income, then enter that amount here.
This is your expected household income when retired. This value is based on your present annual household income, which has been increased by the income growth rate you supplied earlier.
Your desired replacement income is your household income at retirement, multiplied by the income replacement rate you specified.
The supplemental retirement income is the total amount of annual retirement income that you expect to obtain from a pension plan and / or Social Security.
The income replacement gap must be supplied by your retirement savings assets. This value is the difference between your desired retirement income and the annual income supplied by any supplemental retirement income source you have at your disposal.
The total savings required at retirement is the quantity of money you'll need to reach your retirement income goals.
The total savings value available at retirement will be the money available to provide income when you reach your projected retirement age.
This is the age at which all of your retirement funds will be depleted. If this value is greater than the life expectancy value, then a surplus of funds will be available to your heirs. If this value is less than the life expectancy value, then a deficit of funds will be available to your heirs.
This is the surplus, or deficit, of funds in your retirement account when you reach your life expectancy age. If you find yourself short of funds, then you may have to save at a higher rate to maintain your lifestyle when retired, or choose to live more frugally in retirement.