Just wondering why in Step 2a above that you parenthetically add that the maximum Social Security benefit for couples is currently $20,304. I personally am receiving my full SS benefit of $27,156 (age 66) and my wife will receive another $19,000 when she retires next year.
Retirement Planning Worksheet: How Much Do You Need to Save for Retirement?
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If we had a nickel for every person over the last 30 years who asked us ÂHow much do I need to save for retirement? we could finance the next government bailout program ourselves!
Knowing the right answer to this question is the basis for all of your retirement planning. Knowing the right answer can mean the difference between a retirement spent fretting about money while you just get by versus a worry-free retirement that lets you enjoy your golden years.
Yet, a whopping 44% of Baby Boomers born between 1955 and 1964 donÂt know how much they need to save in order to maintain their standard of living in retirement. And only 42% of workers have even tried to figure out how much they need to save for retirement, according to the Retirement Confidence Survey!
So, today we want to help you figure out the answer to this critical question with our Retirement Planning Worksheet. It will walk you step by step through figuring out how much you need to save!
Click here to download Retirement Worksheet as pdf so you can print it out.
| Step One: | Total Income You'll Require in Retirement | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| a. $______ | Income needed annually in retirement (current income) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| b. _______ | Growth Multiplier (where number of years until retirement intersects with 4% in Table 1) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| c. $______ | Inflation-adjusted income (1a x 1b) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| d. _______ | Future Value Multiplier (where life expectancy in retirement intersects with 4% in Table 2) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| e. $______ | Total amount of income needed in retirement (1c x 1d) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Step Two: | Total Amount You Expect to Collect From Social Security | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| a. $______ | Amount expected from S.S. from form SSA-7004 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| b. $______ | Inflation-adjusted S.S. benefits (2a x 1b) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| c. $______ | Future value of S.S. benefits, adjusted for inflation, during retirement (2b x 1d) |
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| Step Three: | Total Amount You Expect to Collect From Pension | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| a. $______ | Amount expected from pension (current salary ÷ 3) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| b. $______ | Inflation-adjusted value of pension (3a x 1b) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| c. $______ | Total value of pension benefits, adjusted for inflation, during retirement (3b x 1d) |
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| Step Four: | Income You Need to Generate | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| a. $______ | Total future value of S.S. and pension benefits (2c + 3c) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| b. $______ | Total income needed during retirement in addition to S.S. and pension benefits (1e - 4a = income shortfall) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| c. _______ | Savings Factor (where life expectancy in retirement intersects with savings factor in Table 3) |
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| d. $______ | Money needed to meet shortfall (4b x 4c) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Step Five: | Savings Portfolio vs. Income | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| a. $______ | Current Savings | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| b. _______ | Portfolio Multiplier(where number of years until retirement intersects with 8% in Table 1) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| c. $______ | Expected value of portfolio at retirement (5a x 5b) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| d. $______ | Additional savings needed before retirement (4d - 5c) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Step Six: | Amount You Need to Save each Year for Retirement | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| a. _______ | Future Value Multiplier (where number of years until retirement intersects with 8% in Table 2) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| b. $______ | Amount you need to save each year before retirement (5d ÷ 6a) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Click here to download Retirement Worksheet as pdf so you can print it out. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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View unverified member's comment - posted by Mr Brant
January 3, 2010 12:14 PM
Shouldn't you use net income ? That is what you actually live on. When retired you no longer pay into SS, retirement plans etc. My wife and I make $125,000. Take home for the year is $67K. We put alot into retirement savings and health care accts. SS and other Fed taxes also come out. So wouldn't we need $67K - $54K based on new information ? It seems like all planners go off of gross pay. Does this pad their pockets with commissions ?
January 3, 2010 5:46 PM
My wife and I retired at the end of 1997. Our last gross earnings in 1997 were approx. $125,000. At that time we were paying $15,000/yr home mortgage; approximately $21,000/yr 401K and taxable mutual fund purchases; $12,500/yr.(10%)charitable contributions; $3000/yr medical insurance; $4000/yr real estate taxes, plus social security and medicare taxes. On retirement, we paid off our mortgage; no longer make regular 401K and mutual fund purchases; reduced real estate taxes to $1200/yr with age 65 yr tax exemptions; rely on medicare advantage plans for our health insurance; and corresponding reduction in charitable contributions. Instead of contributing to our retirement funds,we are now withdrawing from our retirement funds.
12 years later we live at the same level we experienced in 1997 on a before-tax income of approximately $65,000 vs. then $125,000. We supplement our social security and pension income with IRA mutual fund withdrawals based on approximately 7% of our liquid assets values (mutual fund and bank accounts). We have no debt. We travel to Europe almost every year. (Our mutual fund investments for 2009 returned almost 42% since lows of mid-March) We just bought a new 2010 Equinox, financing $12,000 for 3 years at 4.3%.
Have we missed something? We certainly do not need 70-80% of before retirement income to support our current life style.
View unverified member's comment - posted by mik
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