Get Real
Presenting U.S. News's ultimate retirement calculator--the essential tool you need to plot your strategy for the future
WORK SHEET 6
How much will your current retirement savings be worth?
1. Total retirement savings (before taxes)
Include here any stocks, bonds, savings accounts, individual retirement accounts, etc., that are for retirement purposes. Also include your current balance in employer-sponsored retirement savings plans, such as 401(k)'s or Keoghs.
Enter the appropriate factor form the table below, which estimates how much your savings will accumulate.
Years until you retire 0 5 10 20 30 40
Aggressive assumption 1 1 1.40 1.97 3.67 7.61 14.97
Prudent assumption 2 1 1.22 1.48 2.19 3.24 4.80
Cautious assumption 3 1 1.16 1.34 1.81 2.43 3.26
[Footnote] 1 Your investments earn long-term average stock market return, or 7 percent after inflation.
[Footnote] 2 Average 4 percent return after inflation, giving you some protection against volatility.
[Footnote] 3 Average 3 percent return after inflation.
2. Lifetime value of your current personal savings.
WORK SHEET 7
How much do I need to save for retirement?
1. Enter retirement needs estimate from work sheet 2, line 3.
a. Enter adjustment for lost Medicare benefits from work sheet 3, line 4.
2. Add lines 1 and 1a: This is your total retirement need before adjustment for changes in taxes.
3. If you believe your income tax rate will be higher or lower when you retire than it is now, enter the change you expect. For example, if you expect your tax rate to rise 5 percent after retirement, enter .05. If you expect no change in your tax rate, enter 0.
4. This is roughly the increase or decrease in your savings requirement due to changing tax rates.
5. Add line 4 to line 2. This is your total savings requirement after adjusting for changing tax rates.
6. Enter value of your current retirement savings and expected benefits.
a. Value of Social Security benefits (work sheet 4, line 3)
b. Value of pension benefits (work sheet 5, line 5)
c. Value of current savings (work sheet 6, line 2)
d. Total value of expected retirement benefits and current savings (add 6a, 6b, 6c)
7. Total future savings required until retirement (subtract line 6d from line 5). (A negative number represents excess savings--stop here!)
To calculate how much you need to save each year, enter the appropriate factor from the table below.
Years until you retire 0 5 10 20 30 40
Aggressive investments 1 0.156 0.060 0.017 0.007 0.003
Prudent investments 1 0.178 0.078 0.030 0.016 0.009
Conservative investments 1 0.185 0.086 0.037 0.021 0.013
8. This is how much you need to be saving this year.
9. Divide line 8 by your current income and multiply the result by 100. This is the percentage of your income you should be saving.
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