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Retirement Planning Begins with Numerical Projections





Financial Planning Needs.Retirement planning begins with numerical projections. It is never too late to begin planning and saving for retirement. Government pensions or Social Security may only supply 40% of your desired retirement income.  You will need additional income from other investments to fill the gap, and since Americans are living longer these days, the most prudent approach is to begin providing for those future needs now. 

Investment tutorials abound for stock, commodity or currency trading.  Planning starts with a simple assessment of where you are today from a financial perspective and where you want to be when you retire.  These calculators can assist you with these initial numerical projections.


LiftetimeEarnings Calculator


The objective here is to obtain an estimate of your total earnings potential over the remaining years that you plan to work.

Step 1:  Enter your current age

Step 2:  Enter the age that you plan to retire

Step 3:  Enter your current annual income

Step 4:  Estimate your potential annual raise as a “%”.  For a long-term estimate, this figure should be in the 2% to 6% range, unless you expect advancement potential in your future.

For the example shown, $3.5 million is the projection.  A good rule-of-thumb for long-term savings should range from 5% to 10% of this figure.  Save your estimate for later.


Net Worth Calculator


Your objective here is to obtain an assessment of your current financial position.  “Net Worth” is a financial term that equates to the difference of your current assets less your current liabilities.  Your Net Worth represents the amount of initial savings that could be put to work for your long-term investment goals.  In this case, there are three tabs, one for each “Step”, which require your attention and completion.  The number displayed at the top of the calculator will be used in the last calculator.

Step 1:  Assets – Enter the current values of any of your assets as shown: Real Estate, Personal Property, Investments and Cash

Step 2:  Liabilities – Enter the principal balance of your mortgage, if you have one, and the total value of your other outstanding debt, including car loans, credit cards or any other loan commitment

Step 3:  Growth – This section is purely hypothetical to illustrate how important your current financial position is.  You can vary the growth rates for both your assets and liabilities to see the impact over ten years.  The lesson you will learn is that the high cost of debt will eat into your savings plan unless you decide to pay them off as soon as possible.  Mortgage loans are long-term and should be estimated, but credit card and auto loans should be liquidated when possible.

The value calculated for your Net Worth should be carried forward to the next indicator.


Savings Goal Calculator

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The objective of this final calculator is to give you an approximate idea of how much you must save on a monthly basis to realize your long-term savings goal.  After entering your key assumptions, you may then vary the amount you save monthly to see how long your plan will take to arrive at the desired Savings Goal.  The calculator will let you know if your “plan” is unrealistic.  In that case, you must change a variable in order to get valid results.  Your desire should be to arrive at your Savings Goal at the same time as you plan to retire.

Step 1:  Enter a percentage of the amount calculated in the “Lifetime Earnings Calculator” as your “Savings Goal”.  A percent between 5% and 10% is appropriate.

Step 2:  Enter the same percentage of your current income in the “Save Monthly” box

Step 3:  Enter a “Rate of Return” – 7% is a good place to start

Step 4:  Enter an “Inflation Rate” – long-term rates tend to be between 2.5% and 3.5%

Step 5:  Enter the Net Worth figure calculated in the previous calculator in the “Currently Saved” box.

Press the “Submit” button, and your answer will appear in “red” at the top of the calculator.  Try different assumptions and enjoy seeing how easy the calculators do the difficult math computations for you.




Congratulations!  You have taken your first step in financial planning for your future security and wellbeing!  Good Luck with your retirement savings plan!


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