There was a time when saving for retirement was a fairly straightforward affair and people knew exactly when their state retirement pensions would commence – and how much money they had to save for their golden years.
Unfortunately, there have been so many cuts in benefits and the retirement age keeps getting farther and farther away. This means that most people are totally lost when it comes to how much they should be saving, and have no idea how much money they will have to live off when it comes to retirement..
An online retirement calculator will help you better estimate how much should be placed in a retirement fund at any given point in life. The figure provided would be the sum in which you’d need to live comfortably at a specific point in time, whilst taking inflation into account.
A basic retirement age calculator will as what your present income is and will then ask what the expected annual increase will be in percentages per year.
How Much Money Will I Have When I Retire?
Some retirement calculators will ask how many years until retirement, whilst others will break it down into two separate questions:
- Your age at the moment
- Your expected age at retirement
From there, most calculators ask what percentage of final income will be needed upon retirement. Remember, the calculator adjusts for raises and the cost of living in many cases. A retirement age calculator may ask for the expected growth rate of the retirement fund and it may ask for the annuity rate in terms of percentages.
Nonetheless, it is still necessary to account for the state pension age which will be changing over time, unless you have plans of retiring early. If that is the case then it would be necessary to use an early retirement calculator that can tell you what you would need to place in an account to earn the amount of money needed at a younger age. This amount would need to be sufficient to maintain until the state pension kicks in.
Calculating State Retirement
With all the news in recent months about government raising the retirement age systematically over the next few years, taxpayers are trying to calculate just how much they will need to adjust their retirement savings by in order to survive if they want to retire earlier than the minimum state retirement age.
A state retirement age calculator will help estimate what a retirement pension would look like at the state mandated age, but for those who don’t want to work until they are in their mid to late 60’s, an early retirement calculator would be a better tool.
Because there really is so much uncertainty in state pension benefits in the future, near or far, many UK taxpayers have begun looking at setting up an individual retirement fund that will provide at least a modicum of security in their elder years.
Whether planning for an early retirement or not, there is no guarantee that government pension funds will be there in the future as planned. Use a retirement age calculator to help determine how much disposable income should be placed in a retirement fund. That is the safest way to prepare for the future.