Free Calculator Helps You Plan
By Mark Mills, CFP
OK Boomers. Time to crunch some numbers. Have you ever tossed and turned at night wondering, “How much money will I need to retire?” Maybe you’ve puzzled over the question, “If I can save half-a-million bucks, how long will it last when I retire?”
The good news is you do not need to buy a Cray Supercomputer or hire Alan Greenspan to figure this stuff out. The better news is that a simple and FREE calculator can be downloaded in minutes which will give you answers to these and many other deep mysteries of the retirement numbers game.
Up front note: sorry Mac World friends, this is a Windows only program (Windows 95/98/Me/NT/2000/XP).
The Retirement Calculator comes courtesy of the wizards at American River Software. They sell some other financial software but the calculator is a freebie. To download go to
the American River site.
What kind of tricks can this puppy do? Almost anything, once you decide what parameters to feed it.
For example, let’s say you think you can scrape together $500,000 from your 401(k), IRA’s, selling off the mansion and going condo, cashing in the old war bonds, and having a Wal-Mart size yard sale. Congratulations. But exactly what does that buy you in cash flow every year as you begin the Life of Riley (minus Peg, Gillis, and the job at the plant)?
You’d like to take $35,000 a year from your stash. That, plus your social security (yes, there will be something, even after Bush gets through with it), and for the lucky few an actual pension, will provide a Trumply sum, lavishing you with a roof over head, 2,000 calories a day, and an occasional trip to Wally World.
Since you plan to live a long time you have to consider inflation. You’re an optimist, so you guess inflation will average just 3 per cent a year for the rest of your time on the planet. That means your 35K must go up each year by 3 per cent to keep pace.
And while you slice out a $35,000 piece of the pie in year one, the rest of the pie keeps growing. You are not hopeless when it comes to investing so you think you can average a
7 per cent annual return on the balance.
With those inputs, the calculator tells you how long your half-mill will last until you go bust. In this case, 21 years. And if that 3 per cent inflation sounds like a harmless nuisance, your payout in year 21 is $63,213. Even a slow drip of inflation is like water torture to your savings.
You can re-jigger the inputs all you want. If you think you can only get a 6 per cent investment return, the well runs dry in 19 years instead of 21.
If you want your money to last 30 years the calculator will tell you how much you can take out each year. Again, with $500,000 to start, 3 per cent inflation, and a 7 per cent annual return, a 30-year payment stream starts with $27,441 in year one.
If you want to take out $50,000 a year for 25 years with 3 per cent inflation and a 6 per cent annual return, our little buddy will cough up the total needed at retirement: $904,802. Actually, it just coughs up the number; you have to come up with the cash.
The calculator generates a printable report showing year-by-year withdrawals, investment returns, and balances.
Again, it is easy to download and easy to use. But it packs a wallop with invaluable information to help you plot your course to the Promise Land.
OK Boomers. Time to crunch some numbers. Have you ever tossed and turned at night wondering, “How much money will I need to retire?” Maybe you’ve puzzled over the question, “If I can save half-a-million bucks, how long will it last when I retire?”
The good news is you do not need to buy a Cray Supercomputer or hire Alan Greenspan to figure this stuff out. The better news is that a simple and FREE calculator can be downloaded in minutes which will give you answers to these and many other deep mysteries of the retirement numbers game.
Up front note: sorry Mac World friends, this is a Windows only program (Windows 95/98/Me/NT/2000/XP).
The Retirement Calculator comes courtesy of the wizards at American River Software. They sell some other financial software but the calculator is a freebie. To download go to
the American River site.
What kind of tricks can this puppy do? Almost anything, once you decide what parameters to feed it.
For example, let’s say you think you can scrape together $500,000 from your 401(k), IRA’s, selling off the mansion and going condo, cashing in the old war bonds, and having a Wal-Mart size yard sale. Congratulations. But exactly what does that buy you in cash flow every year as you begin the Life of Riley (minus Peg, Gillis, and the job at the plant)?
You’d like to take $35,000 a year from your stash. That, plus your social security (yes, there will be something, even after Bush gets through with it), and for the lucky few an actual pension, will provide a Trumply sum, lavishing you with a roof over head, 2,000 calories a day, and an occasional trip to Wally World.
Since you plan to live a long time you have to consider inflation. You’re an optimist, so you guess inflation will average just 3 per cent a year for the rest of your time on the planet. That means your 35K must go up each year by 3 per cent to keep pace.
And while you slice out a $35,000 piece of the pie in year one, the rest of the pie keeps growing. You are not hopeless when it comes to investing so you think you can average a
7 per cent annual return on the balance.
With those inputs, the calculator tells you how long your half-mill will last until you go bust. In this case, 21 years. And if that 3 per cent inflation sounds like a harmless nuisance, your payout in year 21 is $63,213. Even a slow drip of inflation is like water torture to your savings.
You can re-jigger the inputs all you want. If you think you can only get a 6 per cent investment return, the well runs dry in 19 years instead of 21.
If you want your money to last 30 years the calculator will tell you how much you can take out each year. Again, with $500,000 to start, 3 per cent inflation, and a 7 per cent annual return, a 30-year payment stream starts with $27,441 in year one.
If you want to take out $50,000 a year for 25 years with 3 per cent inflation and a 6 per cent annual return, our little buddy will cough up the total needed at retirement: $904,802. Actually, it just coughs up the number; you have to come up with the cash.
The calculator generates a printable report showing year-by-year withdrawals, investment returns, and balances.
Again, it is easy to download and easy to use. But it packs a wallop with invaluable information to help you plot your course to the Promise Land.
posted at 12:41 PM
1 Comments:
Or you can go to AtPrime.Com and use the pension calculator without having to download anything. You just have to log in and membership is free. The site is run by an actual pension expert and has tons of free informational articles, links, videos, a glossary etc. It's really comprehensive for people who want/need to know about their pensions and planning for retirement!
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