Build Your Personalized Wealth Plan to Confidently Retire Early
This retirement calculator figures how much investment is required each month to reach your savings goal by a given date. It solves for monthly investment required and leaves time fixed.
If you would prefer to solve for time try the Retirement Savings Calculator (also available on this website). Each calculator shows you a different way to reach your goal – by increasing time or by increasing savings.
Retirement Investment Calculator Tips
When should you start investing for retirement?
There is actually no best or worst time to begin retirement savings – the earlier the better.
It is like the ancient saying, “When is the best time to plant a tree?” 20 years ago is best, but if you didn’t do it back then, starting now is second best. The problem is life conspires to keep you from building your retirement fund:
- When you are in your 20’s retirement investment is the last thing on your mind. You’re busy finding a spouse, defining a career, and defining yourself.
- When you are in your 30’s you’re too busy saving for a house, paying for furnishings, buying cars, and everything that goes with that lifestyle to invest for retirement.
- When you are in your 40’s you’ve got kid’s braces and college tuition right around the corner.
- By the time you’re in your 50’s so much time has passed that saving for retirement is much more difficult because you’re required to save a significantly higher percentage of your income to reach the goal.
The reality is retirement is something you should continually be saving for – the earlier the better. And this retirement investment calculator will help you see how much you need to save each month to reach your planned investment goal regardless of when you start.
How Much Do I Need To Invest For Retirement?
How much you need to invest for retirement depends on when you start saving and how big your retirement budget will be.
If you make some rough assumptions including that your retirement budget will be 80 percent of your pre-retirement, pre-tax income, that you’ll live roughly 30 years in retirement, start with zero savings, and get average historical investment returns, then below are some rough guidelines to match those rough assumptions.
Please recognize, however, that these guidelines are REALLY rough:
- If you start saving in your 20’s then consider 10-15% of your income.
- If you start in your 30’s then save 15-25% of your income.
- Waiting until your 40’s for retirement investment makes it much more difficult at 25-35% of your income.
- The numbers for starting in your 50’s are likely unattainable for someone who hasn’t shown a lifetime a saving habits and frugality – roughly 60% of their income.
Two conclusions are obvious – the earlier you start saving the easier the goal is to attain, and the earlier you retire the harder the goal is to attain.
Using this retirement investment calculator allows you to fix your time period and easily calculate how much you need to save. It makes the math easy for you.
Why Do I Need A Retirement Fund?
Unless you plan on being indigent or dependent on charity, there really is no choice.
You must build your retirement savings now to support your lifestyle needs when you are no longer employable (due to old age) or lack the energy to earn a living. Sad but true.
Additionally, nobody wants to be a burden to their family when they get old. It represents a loss of dignity and shows everyone that you were not responsible in planning for your financial future. Building a nest egg is the only reliable solution.
The alternative of relying on a government pension system (like Social Security) is no plan at all. The income from these pension funds is designed for subsistence only and does not allow for comforts, travels, or medical emergencies.
The reality is you either plan for your retirement by saving now, or you are planning (by default) to lose your freedom and independence when you become elderly.
The choices are straightforward. Would you rather have a hefty tax deduction today by funding your retirement accounts and building your financial security for tomorrow, or would you prefer to spend a little more today and risk losing your dignity and freedom tomorrow?
Start investing for your retirement as early as possible. Follow the formula and adjust your living expenses around it. Saving for your retirement is an important step that you should take to secure your lifestyle when your active income ceases.
Like death and taxes, retirement will happen with certainty. You must prepare for it, and our wealth planning course gives you the exact steps you need to take.
Retirement Fund Calculator Terms And Definitions:
- Retirement – When you no longer work so that you’re living off your savings and pensions.
- Investment – When you put financial resources at risk to earn a return.
- Saving – The process of allocating money for future use instead of spending on current consumption.
- Deposit – The amount of money you need to save each month to reach your investment goal.
- Annual Percentage Rate – The return on your investment that is earned each year.
- Gross Income – Your total income earned before reducing for taxes and deductions.
Related Retirement Calculators:
- Ultimate Retirement Calculator: It’s called the ultimate retirement calculator because it does everything the others do and a whole lot more.
- Retirement Withdrawal Calculator: How much can I afford to withdraw each month given the retirement savings I have accumulated – both before and after inflation?
- Simple Retirement Savings Calculator: How long will it take me to reach my retirement savings goal given my current savings balance and my monthly deposits? Solves for time.
- Millionaire Calculator – How To Retire A Millionaire: So you wanna be a millionaire? This fun calculator will tell you when it will happen and what a million dollars will be worth by then after adjusting for inflation.
- How To Save Money For Retirement – The Easy Way!: If you have problems saving for retirement then this calculator will show you an easy way.
- 401k Calculator: If I deposit a certain amount in my 401k each month what will it grow to by any future point in time?
- 401(k) Early Withdrawal Calculator: What is the financial cost of taking a distribution from my 401(k) or IRA versus rolling it over into another tax deferred account?
- Taxable vs. Tax Deferred Investment Growth Calculator: How will my future value and investment return differ between taxable and tax deferred investing?
- Interest Calculator – Simple & Compound Interest: Compares simple monthly interest income to long term compound growth for surprising results.
- Roth IRA Calculator: What is the after tax impact of switching from a traditional IRA to a Roth IRA?
- Present Value of Annuity Calculator: What is the present value of a series of equal cash flows to be received in the future?