The Seattle Times: Business & technology: Retiring Well

The following Ballpark Estimate calculator, provided by the American Savings Education Council (ASEC), is designed to provide a rough estimate of what you will need to save annually to fund a comfortable retirement. It provides an approximation of projected Social Security benefits and utilizes only one of many possible rates of return on your savings. Ballpark reflects today's dollars and does not account for inflation; therefore, you should recalculate your savings needs on a regular basis and as your salary and circumstances change. You won't want to stop with the Ballpark Estimate; it is only a first step in the retirement planning process. You will need to do further analysis, either yourself using a more detailed worksheet or computer software, or with the assistance of a financial professional.

NOTE: Use digits only, with no dollar signs or commas, when filling out the calculator.

Ballpark Estimate Calculator

Planning for retirement is not a one-size-fits-all exercise. The purpose of Ballpark is simply to give you a basic idea of the savings you'll need when you retire.

So let's play ball!

If you are married, you and your spouse should each fill out your own Ballpark Estimate worksheet taking your marital status into account when entering your Social Security benefit in number 2 below.

	1. How much annual income will you want in retirement? (Figure at least 70% of your current annual gross income just to maintain your current standard of living. Really.)
	Enter your current annual gross income
	Click on the percentage of your current annual gross income you would like to use as your goal
	Tips to help you select a goal: 70% to 80% - You will need to pay for the basics in retirement, but you won't have to pay many medical expenses. You're planning for a comfortable retirement without much travel. You are older and/or in your prime earning years. 80% to 90% - You will need to pay for some medical costs above Medicare, which on average covers about 55%. You plan to take some small trips, and you know that you will need to continue saving some money. 100% to 120% - You will need to cover all costs above Medicare. You are very young and/or your prime earning years are ahead of you. You would like a retirement lifestyle that is more than comfortable. You need to save for the possibility of Long Term Care, and you know based upon family history that you may live past 95.
	2. Enter the income you expect to receive annually from: Social Security If you make under $25,000, enter $8,000; between $25,000 - $40,000, enter $12,000; over $40,000, enter $14,500 (For married couples - the lower earning spouse should enter either their own benefit based on their income or 50% of the higher earning spouse�s benefit, whichever is higher.) For a more personalized estimate, enter the appropriate benefit figure from your Social Security statement from the Social Security Administration (1-800-772-1213, www.ssa.gov). Ballpark assumes you will begin receiving Social Security Benefits at age 65, however the age for full benefits is rising to 67. Your Social Security statement will provide a personalized benefit estimate based on your actual earning history.
	Traditional Employer Pension -- a plan that pays a set dollar amount for life, where the dollar amount depends on salary and years of service (in today's dollars)
	Part-time income
	Other
	This is how much you need to make up for each retirement year:

Now you want a ballpark estimate of how much money you'll need in the bank the day you retire. So the accountants went to work and devised a simple formula. For the record, they figure you'll realize a constant real rate of return of 3% after inflation, you'll live to age 87, and you'll begin to receive income from Social Security at age 65. If you anticipate living longer than age 87 or earning less than a 3% real rate of return on your savings, you'll want to consider using a higher percentage of your current annual gross income as a goal on line 1.

	3. To determine the amount you'll need to save, click on the age at which you expect to retire. Important Note - If you want to try different scenarios with Ballpark, clear the worksheet each time and start again. Changing numbers in one part of the worksheet will not prompt the rest of the worksheet to recalculate based on the new information. To clear the worksheet, click on the "Clear Form" button at the bottom of the worksheet.
	4. If you expect to retire before age 65, click on the age at which you expect to retire. (Note: This field relates to Social Security and will remain 0 if you entered 0 as your Social Security benefit on line 2.)
	5. Enter your savings to date (include money accumulated in a 401(K), IRA, or similar retirement plan as well as money accumulated in savings accounts, savings bonds, certificates of deposit, and other savings vehicles):
	Click on the number of years you have until retirement. What if I have less than 10 years until retirement?
	Total additional savings needed at retirement:

Don't panic. Those same accountants devised another formula to show you how much to save each year in order to reach your goal amount. They factor in compounding. That's where your money not only makes interest, your interest starts making interest as well, creating a snowball effect.

6. To determine the ANNUAL amount you'll need to save, click on the button that shows how many years you have until retirement.
What if I have less than 10 years until retirement?
My result is a negative number. What does that mean?

See? It's not impossible or even particularly painful. It just takes planning. And the sooner you start, the better off you'll be.

Marketplace

Jobs	Autos	Shopping

Homes	Rentals	Post an ad