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Summary of Steps. Estimate income you need to meet goalsEstimate your retirement incomeCompute your inflated-adjusted annual shortfallDetermine annual or monthly savings to meet retirement needStart saving!. Future Retirement Needs. 100% v. 70%-90% of current living expenses?Use projected
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1. Chapter 14 Planning for Retirement:
Calculating Needs
2. Summary of Steps Estimate income you need to meet goals
Estimate your retirement income
Compute your inflated-adjusted annual shortfall
Determine annual or monthly savings to meet retirement need
Start saving!
3. Future Retirement Needs 100% v. 70%-90% of current living expenses?
Use projected living expenses?
4. Future Retirement Needs
5. Summary of Steps Estimate income you need to meet goals
Estimate your retirement income
Compute your inflated-adjusted annual shortfall
Determine annual or monthly savings to meet retirement need
Start saving!
6. Social Security?
Employer pensions?
Other sources? Estimated Income in Retirement
7. Estimate Social Security Income http://www.ssa.gov/estimator/
30% reduction in benefits if retire at age 62
8% increase in benefits for every year you postpone retirement after age 67 and until age 70
Earnings test: Lose $1 of every $2 you earn over $14,160 (2011) when you retire early
After-tax computation
8. Employer-provided Pension Income Defined benefit typically formula-based (Boeing example)
Defined contribution depends on
Amount contributed annually
Number of years of contribution
Employer matching
Performance of investments
9. Statements (assumed rate of return)
If you continue to contribute as you have, you may expect monthly income of $2,355
If you increase your contributions by $200 per month, you may expect monthly income of $2,570
Integrated pension plans Employer-provided Pension Income
10. Estimate Other Income Windfall income, such as an inheritance from your gozillionaire Aunt Mildred
11. Estimated Income in Retirement
12. Summary of Steps Estimate income you need to meet goals
Estimate your retirement income
Compute your inflated-adjusted annual shortfall
Determine annual or monthly savings to meet retirement need
Start saving!
13. Inflation-adjusted Shortfall
14. Summary of Steps Estimate income you need to meet goals
Estimate your retirement income
Compute your inflated-adjusted annual shortfall
Determine annual or monthly savings to meet retirement need
Start saving!
15. Nest Egg and Savings
16. Summary of Steps Estimate income you need to meet goals
Estimate your retirement income
Compute your inflated-adjusted annual shortfall
Determine annual or monthly savings to meet retirement need
Start saving!
17. Questions?