The variables used in our online calculator are defined in detail below, including how to interpret the results.
This is your current age in years.
This is your expected retirement age.
This is your life expectancy when you reach your estimated retirement age. Many 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.
If you currently have a retirement 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.
This is how much you'd like to contribute, or are presently contributing, to all of your retirement accounts each year. By increasing or decreasing your annual contribution, you can see the impact on your retirement fund balance at retirement.
This is the annual rate of return you expect to realize on this fund between now and your expected retirement age. Once again, by increasing or decreasing the expected annual return, you can see the impact on your fund's balance.
This is your desired, or targeted, annual income in retirement. Keep in mind that your overall income needs in retirement are likely to be less. You may also qualify for Social Security or a pension at work. Depending on your mix of retirement accounts, you might also want to take into consideration your tax liabilities for each type of account.
This is the expected rate of inflation between now and your retirement age. This value is used later to demonstrate the impact of inflation on your total retirement income needs.
This is the expected balance you will have in all your retirement accounts at retirement age if you make the annual contributions to the accounts each year, and the expected annual return is achieved.
This is the annual retirement income you can expect to receive from your accounts. Keep in mind that withdrawals from some accounts may be free from income taxes.
The calculated retirement income adjusted for inflation demonstrates the impact that inflation has on future Euros; they are worth less. The further you are from your expected retirement age, the greater the impact inflation has on your expected retirement income.
This is the calculated surplus or shortfall in retirement income you might encounter based on your assumptions. For example, if you are experiencing a shortfall in retirement income, you can try increasing your contribution rate until you've got a surplus of income. Keep in mind that when setting an income target, you might have other sources of income such as Social Security or a pension plan at work.