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Quicken has some future planning Calculators built in.
But you can work up a spread sheet with current values then add a growth factor to each year.
Then add each years contribution to it and continue.
In a different tab you expected future costs, then add inflation factor to each year.
One big item will be future health care costs, if your retire before the government starts playing for it will be in the 20K a year range by then. So you will need a 100K+ buffer just to cover your till you get to 65/70 (I would expect to see the age go to 70 by then)
Quicken has some future planning Calculators built in.
But you can work up a spread sheet with current values then add a growth factor to each year.
Then add each years contribution to it and continue.
In a different tab you expected future costs, then add inflation factor to each year.
One big item will be future health care costs, if your retire before the government starts playing for it will be in the 20K a year range by then. So you will need a 100K+ buffer just to cover your till you get to 65/70 (I would expect to see the age go to 70 by then)
Thanks,
I have plan to need $6000/month when I retire. Should I use inflation with that number.
I am using the Fidelity retirement calculator where my 401k is currently located. The software is asking me how much expense should I enter.
I am 34 yrs old and want to know how to allocate my 401k ($7k) and IRA ($26k).
Where can i read and educate myself on how to do this?
How do I calculate how much I need for retirement if I want to retire at 60 years old?
Thanks,
there are many ballpark rules of thumb.
my own favorite is to add up all the expenses that are written in stone and non discretionary.
i times that by 2 to cover the discretionary stuff as well and thats the amount im figuring i want as an income. i subtract out any income like a pension ,social security,etc and x that by 25.
thats how much i want to start with to draw that income.
my immeadiate bills are 45k a year that are non discretionary so i times it by 2 and that includes food,trips,gifts, etc . that is 90k.. i then subtract out a small pension and income from ss and rentals and ill get about 70k from that. that leaves 20k ill need from savings so 20k x 25 = 500k.
i would need to save at least 500k to draw 90k a year .
why do it this way? at least 50% of my income is discretionary spending and in down years i can cut that spending by up to 50% if needed.
more then likely i would have adjusted 10% in 2008 so 50% is a crazy amount to cut but it gives you an idea of the slack .
i would then use firecalc or fidelitys planner to see the risk level i have to take to generate that amount.
if the risk is higher then i want then i have to save more money to retire to compensate for going more conservative.
.
Last edited by mathjak107; 11-11-2012 at 04:57 PM..
my own favorite is to add up all the expenses that are written in stone and non discretionary.
i times that by 2 to cover the discretionary stuff as well and thats the amount im figuring i want as an income. i subtract out any income like a pension ,social security,etc and x that by 25.
thats how much i want to start with to draw that income.
my immeadiate bills are 45k a year that are non discretionary so i times it by 2 and that includes food,trips,gifts, etc . that is 90k.. i then subtract out a small pension and income from ss and rentals and ill get about 70k from that. that leaves 20k ill need from savings so 20k x 25 = 500k.
i would need to save at least 500k to draw 90k a year .
why do it this way? at least 50% of my income is discretionary spending and in down years i can cut that spending by up to 50% if needed.
more then likely i would have adjusted 10% in 2008 so 50% is a crazy amount to cut but it gives you an idea of the slack .
i would then use firecalc or fidelitys planner to see the risk level i have to take to generate that amount.
if the risk is higher then i like then i have to save more money to retire to compensate for going more conservative.
.
Thanks,
I calculated, I will need about $5k a month when I retire at 60 years age. I am not including SS or pension into the $5k. I am assuming the SS will just be a cushion cause it may not be here at retirment age, I dont know. I plan to live to 92 years old.
Here is what Fidelity states after I enter in the $35k I already have in 401k with a monthly 401k contribution of $482. I am not sure if Fidelity is
My total Goal:
$2,185,313
Amount Needed per month in retirement:
$5,000/mo
(51% of pre-retirement income)
On Track to Have at retirement:
$1,172 - $2,397/mo ( if Markets Perform Poorly ($1,172) - Markets Perform Average ($2,397))
(12-25% of pre-retirement income)
Additional Savings Needed Per Month:
$857.00 - $2,542.00/mo
Hmmmmm, doesn't look like I will make it. However, the tool does not allow me to include that I plan to have $450k saved in my savings account by the time I retire at 60. Currently, I save about $1200 a month and even more per month once my mortgage and student loan is paid off. So with $450k I plan to have in my savings account, that divides (450k/32 years) out to $1531.00 per month to spend. Lets say, I get about $2000 month from the market return above, add to $1531.00, that will give me about $3531.00 per month in retirement, which is about $1500 short of my goal of $5000 per month.
So, if I want to retire at 60 years old, I will be short about $576k, what shall I do???
Retirement Expenses ($)
Metlife 22.05
xboxlive 11
cell phone 200
House warranty 42
car gas 150
monthly expense 600
a/c warranty 17.98
health care after retire ??? 700
dog stuff 100
yearly vacation save per month 416.6666667
lights water gas 290
house alarm 60
comcast 165
car insurance 200
car note 400
taxes 316.73
house insurance 78.75
So the retirement expenses come out to $3770 per month, I round to $5000 to account for regular car and house fix per year.
Without ss ,pension,spousal benefits etc you got a lot of saving to do.you will need a high allocation to assets that can grow and the blessing of the market gods.
2 million can be a rough number to hit unless you can save more.
Going out at 60 can eat alot of extra income especially when you have to pay medical.
Last edited by mathjak107; 11-11-2012 at 06:50 PM..
No, I left out SS on purpose just as a cushion. I keep hearing all this hype about no ss for youngsters when we retire.
When I add the SS, it comes out to
My total Goal:
$1,653,060
Amount Needed per month in retirement:
$5,000/mo
(51% of pre-retirement income)
On Track to Have at retirement:
$2,510 - $3,770/mo ( if Markets Perform Poorly ($2,510) - if Markets Perform Average ($3,770))
(26-39% of pre-retirement income)
Additional Savings Needed Per Month:
$494.00 - $1,769.00/mo
So, by adding the SS and guesing I get about $3500 per month at retirement just from 401k contribution (to the company match only) and the $1531.00 (from my previous post), this should come out to near $5000 per month in retirment, which will meet my retirement goal and allow me retire at 60 years old.
Looks like I gotta plan here if the Fidelity tool calculate the SS correctly, I am discipline to save each month as I have plan, and I allocate my 401k correctly to return at or above market average.
So is $1,653,060 my retirement goal, I need to start planning to meet??
Without ss ,pension,spousal benefits etc you got a lot of saving to do.you will need a high allocation to assets that can grow and the blessing of the market gods.
2 million can be a rough number to hit unless you can save more.
Going out at 60 can eat alot of extra income especially when you have to pay medical.
Thanks mathjak107.
I redo the numbers including the SS benefits estimated by Fidelity. See my add post please. My new goal is $1,653,060. I left the wife out for now, she is contributing to her 401k @ 8% contribute, but here yearly income is $25k per year. Right now she is thinking of going back to college, so I left her out as some cushion on the calculations. But the retirement expenses accounts for both of us. My current company does offer a pension plan, but I left that out as well as a cushion, just incase they stop offering it.
Is that $1,653,060 accounts for inflation, i believe so?
Quote:
Going out at 60 can eat alot of extra income especially when you have to pay medical.
I accounted for $700 for health care monthly bill, is that enough for us to pay?
Why is all retirement planning tools suggesting I will need atleast 85% of my pre-retirement income?
My income now is $95k, but I only calculated I will need $5k (in todays dollar amount)
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