There may be several complicated calculations that need to be made to determine a person’s retirement income and expenses, but there is a simple retirement calculator that gives a good snapshot of whether a person can afford to retire when they reach a certain age. In its most simplified form, a simple retirement calculator looks at projected income and anticipated expenses to tell whether the potential retiree has enough money to cover all of their expenses.
This can be especially useful for those nearing retirement age who need to know if they have enough money in their retirement fund or 401K to maintain their current style of living once they quit working. By using a simple retirement calculator they can determine if they need to add money every month while working to bring the balance up to a livable level. They may also want to consider shedding some expenses they no longer need to help make their retirement budget balance.
When using a simple retirement calculator it is important to remember that it does not include any possible increase in expenses or unforeseen losses of income. Many times a retiree’s investments may go sour greatly reducing the entire portfolio balance as well as their monthly income.
Making Adjustments To Meet Financial Goals
By using a simple retirement calculator it can offer general guidance on what steps may need to be taken to insure the money is available for retirement. By adjusting from the figures calculated with a simple retirement calculator, it can be determined if an early retirement is possible or if they will need to continue working beyond the full retirement age.
With Social Security, for example, retiring early can cause the loss of as much as 25 percent of the retirement income. If their additional retirement income streams do not make up for that 25 percent loss, they will need to continue working until they reach the age for full retirement. The simple retirement calculator can show if they can live on the lesser amount or will need to work beyond the retirement age to stay financially afloat.
Five years prior to retirement may be too late to use a simple retirement calculator and find out there is not enough money on which to retire. The time to begin planning for retirement is while a person is young enough to put a sufficient amount into a retirement plan. However, regardless of how long and how much a person has saved, a simple retirement calculator can tell them if they have the funds to afford to quit working.