Retirement Calculator
Quick Example to See What it Does: Enter 100000 in “I Now Have”. Set the “Yearly Contribution” picker to 5000. Leave the Interest Rate picker alone. Spin the Year column of the Date Picker to 10 years in the future (2019 if it’s 2009, 2020 if it’s 2020). The “You’ll retire with:” number at the top of the screen should be $250,513. Now go plan for your retirement!
What it Does: Retirement calculates how many dollars you will have at a specified future retirement date, given your current retirement savings, and the average annual contribution you will make from now until you retire. Retirement calculates the number of days until your retirement and computes the Future Value of your current retirement savings, compounded daily. Retirement adds to this the Future Value of your annual contributions to your retirement. The retirement contributions are assumed to be monthly (most 401(k) plans contribute every paycheck), and are compounded monthly going forward to give you a Future Value of your annual retirement contributions. The sum of the Future Value of your current retirement savings plus the Future Value of your annual retirement contributions equals the amount of dollars you will have when you retire.
Inputs:
I Now Have: Tap on the I Now Have input pad (the white box just below the letters, not the letters I Now Have) to input the amount of dollars you currently have set aside for retirement to a numeric value input screen. Tap “Done” after you input your current retirement balance. This would include any retirement assets that are in investment accounts that earn you a return. You would typically include the sum of any IRAs you have, the balance of your company 401(k) plan, and any other assets you hold towards retirement that are investments (can increase in value).
Yearly Contribution: Tap on the Yearly Contribution input pad to bring up a Picker that will allow you select the annual contribution you make towards your retirement. If the exact amount you contribute is not shown in the picker, pick the closest value. Tap “Done” after you have selected your Yearly Contribution. You should include in Yearly Contribution the amount you contribute plus any matching that your employer makes. So if you contribute $10,000 annually to your 401(k) plan and your employer has 50% matching you would input 15000. You should not include in Yearly Contribution the annual investment gains in your retirement accounts, since that is what the Interest Rate represents.
Interest Rate: Tap on Interest Rate to bring up the Interest Rate Picker. Select the annual interest rate you think you will earn on your retirement dollars. You can select an Interest Rate from 0 to 99.9 percent. The decimal (.1, .2, …) portion of the picker is active even if it is not directly next to the whole number interest rate you select. Tap “Done” after you have selected your interest rate. The default Interest Rate is 6%. You select your retirement interest rate based on how well your retirement investments have done in the past, and you can use the other two calculators included in Investment Return to get an idea of what kind of Interest Rate return you get on your investments.
Retirement Date: There is only one Date Picker in Retirement Calculator, and you use it to set the day you are going to retire. Spin the columns to set the day you are going to retire. If you touch a column value you see in the date picker, that value will move to the middle selected column value. The retirement date must be in the future. You don’t see the retirement date anywhere but on the date picker. Once you set the retirement date it computes the future value of your nest egg at retirement based on all the inputs automatically, and you see that future value at the top of the calculator.
Outputs:
There is only one output for retirement calculator: the future value of your nest egg, shown at the top of the calculator. This is the nominal dollar amount you will have at your future retirement date. You can model your retirement by changing the inputs to the calculation. Spin the year column on the date picker slowly, or the interest rate picker, or the Annual Contribution amount and you will see how it affects the amount you will have for retirement in the future.