Enjoying a leisurely weekday morning on your porch or jet setting across the globe - whatever your definition of retirement is, you're not alone in dreaming of the day you finally get to do it. For the average American, the idea of paying off debt and saving enough money for a comfortable retirement is daunting - but it doesn't have to be. Breaking the journey into smaller, more manageable steps makes the goal seem that much closer. These three calculators will give you a target savings number to help you make the most of your golden years.
The first calculator comes from the American Association of Retired Persons. It takes advantage of the conventional wisdom that says you should aim to replace 80% of your income in retirement. You put in your age, current income, and current savings, and it gives you the amount you need to save each month to achieve your retirement savings goals. It assumes a 2% annual salary increase, but you can adjust the value or remove it completely. To determine whether you are saving enough for retirement, it asks for your spending as a percentage of your income, which makes reducing your current expenses a powerful tool on your retirement journey. Paying down debt will also supercharge your account growth - the money you're using to eliminate your debt can be turned into savings as soon as your debt is paid off.
This retirement calculator from NerdWallet bases your retirement income on your current assets, monthly savings contribution, and a savings rate of return, which you can adjust to be lower for your savings accounts, or potentially higher if you have any investment accounts. After your savings, the calculator asks for your monthly expenses, which you can calculate from your last bank statement if you've been budgeting and tracking your spending. Based on your age, it will tell you if you're going to hit your target savings amount. If the calculator shows you falling short of your retirement needs, you can try different ages or savings amounts to find an attainable goal. If you are able to cut your expenses in some areas to increase your monthly savings amount, you'll benefit in two ways - by growing your nest egg now and by reducing the amount of money you need to save in total.
The SmartAsset retirement calculator also asks for your current savings balance and monthly savings, but it uses your annual spending instead of your monthly spending. This may be a better estimate to use if you have expenses that only show up once a year. You have the option to calculate with or without Social Security benefits or a pension. If the calculator says you won't have enough to comfortably retire at a specific age, you can also adjust the retirement age to find a reasonable timeline. Increasing your monthly savings amount or reducing your annual expenses can make retirement attainable that much sooner. The highlight of this calculator is its withdrawal details, telling you the source of each dollar of your retirement income based on tax advantages.
If you have debt or you simply feel as though you could never save enough, don't be discouraged. These three calculators are valuable when it comes to setting reasonable savings and retirement goals, but the one thing any retirement resource will tell you is that time is your best friend. Today is the best day to start saving or investing if you haven't already, no matter how small the amount. Take advantage of compound interest and market growth to make your money just as hard for you as you do for it.