How a Retirement Planning Calculator Can Help Your Retire in Style

By Eric Bayne

If you are one of the many retired people managing their own self directed accounts, you need to find yourself a good retirement calculator. But even if you're young and just starting to work, you need to begin planning for your future retirement. How much money will you have to retire on if you continue to save and invest at your current rate? This is what a good retirement planning calculator will help you to figure out.

Very few things are certain in life. Not your current salary. Not your current rate of return on your investments. Not your good health. All of these things are variables that can change in an instant. Nevertheless, the purpose of creating a retirement plan for yourself is to help to give yourself the best odds of being able to live the good life when you retire. A retirement calculator will help you to do this, but you need a few prerequisites to get started.

What is your current age and at what age do you plan to retire? The greater the distance between these two figures, the more flexibility you have in your options and the greater the chances are that you will be successful. If you are age 60 and plan to retire at age 65, a retirement calculator will not help you much. It can tell you what your income will be when you retire, but beyond that, it won't be of much use. On the other hand, if you are 30 years old and plan to retire at age 65, a retirement calculator can help you plenty. It can tell you what interest rates you need to meed you desired income targets. It can tell you whether you can reach your goals with conservative investments or if you need to take a chance on riskier investments that will compound at higher interest rates. A good retirement calculator will also let you experiment with how different retirement dates will impact your income. You may discover that you can retire much sooner than you thought you would.

What is the minimum amount of money you need at retirement? This is a different question than how much money you would like to have. The minimum amount calculation takes into account the cost of basic human needs and services such as - food, shelter, health care, and so on. A good retirement calculator will look at what you're spending now on these items and extrapolate their costs into the future, taking into account inflation and other cost of living variables such as age. The calculator may alert you that what you thought was necessary to maintain your current standard of living will be, in fact, woefully inadequate 35 years from now. Having this knowledge in hand will let you adjust your savings plan in time to make a difference.

Once your retire, how much money can you safely withdraw without significantly impacting your principal? The principal is your retirement lifeblood. If it disappears, so does your monthly income. The best calculators will let you "play" with the principal amounts and desired monthly income amounts until you are satisfied that the periodic amounts you withdraw, will last you for your lifetime.

Everyone, who is not yet retired, should plug these retirement variables into a calculator at least once a year to ensure that their retirement plan is still on track. You do not want to discover any negative financial surprises when you are finally ready to retire. In fact, even if you are retired, it's always a good idea to periodically take stock of and reassess your financial condition.

Eric Bayne is writer and researcher for http://www.retirementplanhelper.com Visit his site to find out where you can find the best retirement planning calculator.

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