The time post-retirement is truly the golden period in one’s life. It is a phase wherein retired people relax and do things they couldn’t do for long because of their hectic work schedule. After several years of hard work, every individual desires and deserves a relaxed and secure retired life. However, for a stress-free post-retirement life, one needs to be far away from financial worries. There should be enough savings to accommodate housing, medical, food, and travel expenses.

What is a retirement calculator?

A retirement calculator is a specialized tool that enables individuals and couples to plan their life after retirement. For leading the same lifestyle after retirement, you ought to have a good deal of savings. With the help of a retirement planning calculator, you can ascertain the approximate amount of funds you require for leading a happy and secure retired life. It basically makes you find the future value of your current expenses, eventually enabling you to save the required funds. A retirement calculator helps you understand how much you need to grow your wealth before you retire. Also known as the retirement savings calculator, this tool enables you to make the required savings before your targeted retirement date.

You can make your retired life fulfilling using one of the best retirement calculators. For using the tool, you are supposed to input your basic information, such as your current age, retirement age, life expectancy, annual household income, annual retirement savings, expected returns on investments, inflation, expected retirement expenses, and your current portfolio size. The retirement age is the age you wish to retire at and the retirement calculator takes it into consideration. Suppose you retire at 65, so 64 is the age that you contribute to your retirement savings for the last time.

The household income refers to your total household income, which is a total of the couple’s (husband and wife) income if you are married. This information is of vital importance for planning retirement. Current retirement savings refer to the total amount that you currently have saved for your retirement. This would include all the sources of retirement savings, such as IRAs and annuities. The rate of return before retirement is another important part of retirement planning. It is the annual rate of return that you expect from your retirement savings and investments. Likewise, the expected rate of inflation is also a factor that requires your attention while using a retirement calculator for planning your retirement. A common measure of inflation rate is the CPI (Consumer Price Index).

Based on this information and with the help of a retirement calculator, you can adjust your savings rate and can easily find out the approximate amount that you need to put away to meet your monthly spending needs after retirement. Following are the two main factors of retirement planning, which you can ascertain easily using retirement calculators.

Estimating retirement needs

Saving for retired life differs from one person to another, as no two individuals have the same lifestyle and similar expectations from life. Therefore, your retirement saving goal should be in accordance with your present spending status and the amount you think you would be spending on a monthly basis after retirement. At the same time, you should be aware that your future spending capacity wouldn’t be similar to that of today. For example, today you spend more on your kids and house and everything but after retirement, you would be spending more on travel and on your medical bills. Therefore, keep these changes of spending capacity in mind while estimating your retirement needs using a retirement calculator.

In addition to this, you need to consider that you wouldn’t have to save for your retirement any longer when you are already retired. This indicates that you can lessen your income needs by the amount you are saving. For example, you save 15% of your income currently. So, you can easily live on 85% of your income in retirement regardless of the way you spend. Using a good retirement calculator, you can conveniently plan all this for a secured and satisfied retired life.

Adjusting spending needs

Adjusting spending needs is an integral part of retirement planning, which can be done effectively using a reliable retirement calculator. The calculator works on an assumption that people spend a little less than what they spend pre-retirement. You can find out your approximate spending level for accommodating your expenses in the future. There is no compulsion that you have to spend exactly as per your spending level mentioned in the calculator after you retire. In fact, you can choose to spend more, less or the same as your spending level as per your choice.