Retirement Income Calculator

Article Summary

Wondering how much savings you have before retirement age? Use our calculator to make sure your financial security is guaranteed. It will help you predict how much money you will have if you stick to your current retirement plan. And if the amount is not satisfactory, then it’s a sign your strategy requires some amendments.

Our retirement plan calculator allows you to input your data and see how well you’re doing financially in the long term. Try adjusting your inputs to see how they can impact your retirement. It will give you a good picture of your future financial security.

Retirement Calculator

Annuity Association has prepared an intuitive and easy-to-use retirement calculator. The calculator can help you forecast your financial future based on your retirement savings strategy.

All of the retirement income inputs should be aligned with your current situation. Our calculator will help you estimate how long your savings will last, along with your annual expenses and Social Security benefits.

How to Use Our Retirement Income Calculator?

To find out what your retirement savings increase by year, you should fill out the following information:

Your current age
Retirement age – Our calculator needs it to estimate when you will stop making annual contributions to your retirement.
Annual contributions – The yearly contribution you make to your savings each year. This should include any retirement plans and your employer’s contribution to these plans.
Current tax rate – The current marginal tax rate you expect to pay on your taxable investments. The table below will help you find the correct tax rate.

Filing Status and Federal Income Tax Rates on Taxable Income for 2023:

Tax Rate	Single	Married Filing Jointly or Qualified Widow(er)	Married Filing Separately	Heads of Households
10%	$0 to $11,000	$0 to $22,000	$0 to $11,000	$0 - $15,700
12%	$11,000 to $44,725	$22,000 to $89,450	$11,000 to $44,725	$15,700 - $59,850
22%	$44,725 to $95,375	$89,450 to $190,750	$44,725 to $95,375	$59,850 - $95,350
24%	$95,375 to $182,100	$190,750 to $364,200	$95,375 to $182,100	$95,350 - $182,100
32%	$182,100 to $231,250	$364,200 to $462,500	$182,100 to $231,250	$182,100 - $231,250
35%	$231,250 to $578,125	$462,500 to $693,750	$231,250 to $346,875	$231,250 - $578,125
37%	$578,125 or more	$693,750 or more	$346,875 or more	$578,125 or more

Source: Internal Revenue Service

Retirement tax – The marginal tax rate that will be applied to your investments at retirement.
Expected inflation rate – To measure inflation, you should look at the Consumer Price Index (CPI). The average annual inflation rate is 3%, measured from the years of 1925 to 2022. The highest percentage the CPI reached was 13.5% in 1980. According to the U.S. Bureau of Labor Statistics, by the end of October 2022, it was 7.7%.
Rate of return before retirement – This is the annual rate of return you expect to get from your retirement savings. Note that this should be an after-tax rate of return in case you don’t have a tax-deferred investment. For example, 403(b), 402(k), 457(b), and other tax-deferred investment accounts.
Rate of return during retirement – This is the annual rate of return you predict to get from your retirement savings during retirement. If you don’t have tax-deferred retirement accounts, you should input an after-tax rate of return.
Life expectancy – Number of years you are expecting to spend in retirement.

How to Increase Your Retirement Savings?

Seeing that your savings run out earlier than desired is stress-inducing. However, it doesn’t have to be that way. Our retirement savings calculator is designed to help you find gaps in your strategy so that you can fix them.

Some say the more cash savings you have, the more secure your future is. And we can’t argue with that. But there are a few other things you can do to maximize your savings and retire comfortably.

Double your annual contributions with 457(b) and 403(b)

Some people who work in the educational, healthcare, or public sector may have catch-up provisions that allow them to contribute twice to the retirement plan. The eligible plans are 457(b) and 403(b).

Retire in a state with no income and Social Security tax

To maximize savings and avoid paying a big tax, you can choose to retire in states where there is no state income tax. Consider moving to Alaska, Florida, Tennessee, South Dakota, Texas, Nevada, or Washington. As rules tend to change, make sure to do your research before moving.

Open high-yield savings accounts

High-yield savings accounts are one of the popular options for generating more income before retirement. Such accounts are protected by the DFIC and usually have high-interest rates when compared to other investing alternatives.

Since the income is compounded daily, it is worth investing a big chunk of money to generate even more through interest rates.

Invest in Certificates of Deposit (CDs)

If you are looking for low-risk investments with a good interest rate, consider CDs. They provide a fixed rate of return throughout the predetermined period of time and are considered safe and secure due to the FDIC’s insurance.

Fixed Annuities

As a low-risk investment, annuities will allow you to establish a steady source of income for the rest of your life. By paying premiums, you will be given fixed monthly payments for a predetermined number of years.

How Much Savings Should You Have Before Reaching Your Retirement Age?

The default pre-retirement savings percentage is 90%, and ideally, it should go lower than 70%. There are a few reasons for that:

Future expenses

You might not have to spend a lot of money now since you’re working and spending money on daily needs. However, as you get older, a few things might increase in price, namely healthcare, and travel. Taking care of your well-being is important, and seniors tend to visit doctors more often as more health issues occur. Depending on your situation, you may want to dedicate the rest of your life to exploring the world, and that also might take a chunk out of your savings. Consider what you often spend money on and research whether you have enough to cover those expenses.

Inflation rate

You should have enough annual savings to afford things that increase in price over time. So, if you are saving money 30 years in advance, consider checking the value of your money with increased inflation. You can do this in our calculator.

With that being said, some aspects of your life will not require your savings anymore, such as the fact of saving up for retirement. Another factor is having debts. Clearly, paying off the mortgage before retirement is a perfect scenario for all, but not feasible for everyone.

Take Advantage of Social Security Benefits

Being in charge of your retirement strategy means diversifying your investments to maximize savings during retirement. Hence, Social Security benefits should not be ignored – they will only give you more control over your savings.

Earn retirement income with savings accounts like 401(k) and IRAs by taking withdrawals.
Diversify your investments with bonds, mutual funds, and stocks.
Create your own retirement plan with annuities.

Explore Your Retirement Plans with Annuity Association

Annuity Association can provide you with a piece of investment advice to help you get on track to achieve your financial goals.

It goes without saying that investing involves risk, therefore, it is best not to put all your money into one type of investment but instead diversify your investment portfolio to take advantage of all options.