How To Save Money For Retirement Calculator

If you have problems saving for retirement this calculator offers an easy solution – periodic spending. Small, regular payments like your daily fancy coffee at Starbucks, the storage locker fee to hold your junk, and the magazines you don't read can all fund a secure retirement. Try it yourself and see.

For example, just input $5 daily for coffee at 10% interest for 40 years. You'll be shocked. Now try 12% – but make sure you are sitting down first. To complete the exercise simply examine all unnecessary periodic spending in your life, plug these expenses into the calculator using your expected remaining lifetime as the number of years, add up the totals, and you will see a simple way of saving for retirement.

The wake up call this calculator teaches is the true cost of spending is the compounded interest over many years you lost – not the actual money you spent. That is the key principle.

A few things to keep in mind:

• Try using an easy round number like 10% to approximate the long-term historical return from stocks.
• If you invest your savings in paying off high interest debt, you could earn an even better return.
• Be sure to include any sales taxes that might apply when entering expenditure amounts.
• Some items you buy come with additional costs of ownership — such as repair and maintenance costs, operating costs (gas, electricity, etc.), insurance costs, storage costs, etc..
• The calculations do not account for inflation.
• Forgone interest is compounded on a monthly basis and forgone purchases are invested at the end of each spending period.