Definitions
Current age:
Your current age.
Age of retirement:
Age you wish to retire. This calculator assumes that
the year you retire, you do not make any contributions
to your retirement savings. So if you retire at age 65,
your last contribution happened when you were actually
age 64.
Annual contribution:
The amount you will contribute to your retirement savings
each year. This calculator assumes that you make your
contribution at the beginning of each year.
Pre-retirement rate of return:
This is the annual rate of return you expect from your
investments before taxes. The actual rate of return is
largely dependant on the type of investments you select.
For example, from January 1970 to February 2003, the average
compounded rate of return for the S&P 500, including reinvestment
of dividends, was approximately 11%. Savings accounts
at a bank pay as little as 1% or less.Ê It is important
to remember that future rates of return can't beÊpredictedÊwith
certainty and that investments that pay higher rates of
return are subject to higher risk and volatility.Ê The
actual rate of return on investments can vary widely over
time, especially for long-term investments.Ê This includes
the potentialÊloss of principal on your investment.
Post-retirement rate of return:
This is the annual rate of return you expect from your
investments during retirement. It is often lower than
the return earned before retirement due to more conservative
investment choices to help insure a steady flow of income.
For example, from January 1970 to February 2003, the average
compounded rate of return for the S&P 500, including reinvestment
of dividends, was approximately 11%. Savings accounts
at a bank pay as little as 1% or less.Ê It is important
to remember that future rates of return can't beÊpredictedÊwith
certainty and that investments that pay higher rates of
return are subject to higher risk and volatility.Ê The
actual rate of return on investments can vary widely over
time, especially for long-term investments.Ê This includes
the potentialÊloss of principal on your investment.
Current tax rate:
Your current marginal tax rate you expect to pay on your
taxable investments.
Retirement tax rate:
The marginal tax rate you expect to pay on your investments
at retirement.
Is this savings tax deferred?:
Check this box if your retirement savings is being deposited
into a tax deferred account. This includes an IRA, 401(k),
Variable Annuity or other tax deferred investment.
Increase annual contribution?:
Check this box if wish to have your annual contribution
increased each year to keep up with inflation.
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