.Enter what you’ve already saved as your current savings.Move the cursor to the Current Savings text box and type your current retirement savings: for example, if you have some IRA money or you’ve accumulated a balance in an employer-sponsored 401(k) account. Don’t worry if you don’t have anything saved — most people don’t.Enter the annual yield that you expect your retirement savings to earn.Move the cursor to the Annual Yield text box and type the percent. In the little example shown, the annual yield is 9 percent. This is slightly less than the average return that the stock market produces over long periods of time.You can use the long-term return the stock market delivers as your expected yield if you’re taking a do-it-yourself approach, investing in a diversified portfolio of stocks (such as through mutual funds), and you’re really watching your investment expenses — such as would be the case if you’re using low-cost index funds to keep costs low. If you’re working with a financial planner that charges you, say, 1 percent a year, obviously, your return will be 1 percent less in effect.
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Center for Retirement Research. The Target Your Retirement tool from Boston College’s Center for Retirement Research considers income from Social Security as well as from personal savings and employer-sponsored retirement plans. Pros: The calculator takes a broader approach to retirement savings than other tools. Title: Loan Product Advisor Documentation Matrix Author: Freddie Mac Learning Keywords: doc matrix; LPA; documentation matrix; matrix; underwriting; lpa doc matrix.
Also, if you’re investing some portion of your money into lower-risk investments like bonds, that approach, although perhaps very prudent, will slightly reduce your annual yield.Enter the anticipated inflation rate.Move the cursor to the Inflation Rate text box and type the inflation rate. By the way, in recent history, the inflation rate has averaged just above 3 percent.Enter the annual amount added to your retirement savings.Move the cursor to the Annual Contribution text box and type the amount that you or your employer will add to your retirement savings at the end of each year.Enter any other income you’ll receive — such as Social Security.Move the cursor to the Other Retirement Income (SSI, and so forth) text box and type a value.
Note that this income is in current-day, or uninflated, dollars. By the way, you can visit the (SSA) website and use their retirement estimator to get a good working estimate of your future retirement benefits.Indicate whether you plan to save retirement money in a tax-sheltered investment.Select the Tax Sheltered Investment option button if your retirement savings earn untaxed money. Select the Non-Sheltered Investment option button if the money is taxed. Tax-sheltered investments are such things as IRAs, annuities, and employer-sponsored 401(k)s and 403(b)s. A 403(b) is kind of a profit-sharing plan for a nonprofit agency.As a practical matter, tax-sheltered investments are the only way to ride. By deferring income taxes on your earnings, you earn interest on the money you otherwise would have paid as income tax.Enter your current marginal tax rate, if needed.If you’re investing in taxable stuff, move the cursor to the Current Tax Rate text box. Then type the combined federal and state income tax rate that you pay on your last dollars of income.Enter your anticipated retirement tax rate.Move the cursor to the Retirement Tax Rate text box, and then.
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Hey, wait a minute. Who knows what the rates will be next year, let alone when you retire?
You probably should type 0, but remember that the Annual Retirement Income after Taxes is really your pretax income (just as your current salary is really your pretax income).Indicate whether the annual additions will increase.Select the Inflate Contributions check box if the additions will increase annually by the inflation rate (because your salary and 401(k) contributions will presumably inflate if there’s inflation).After you enter all the information, click Calculate and take a peek at the Annual Retirement Income After Taxes field.The figure shows $33,838.07. Not bad really.
If you want to see the after-tax income in future-day, inflated dollars, deselect the Show in Today’s $ check box but leave the Inflate Contributions check box selected.To get more information on the annual deposits, balances, income, and so on, click the View Schedule button, which appears on the face of the Retirement Calculator dialog box. Quicken whips up a quick little report showing the annual deposits, income, and ending retirement account balances for each year you plan to add to and withdraw from your retirement savings.
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January 2023
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