Annual income you would need if you retired Example You  
Current annual income $30,000  
Your income replacement ratio x80%

      80 85 90 95 100

Replacement Ratio

What percent of your annual income will you need each year you are retired?

 
Estimated income need $24,000 (a) (a)
     
Retirement income you expect to receive (annual amounts; don’t count income from personal savings and investments)      
Social Security $8,000  
Employer’s pension $0  
Other income $5,500  
Total income from other sources $13,500 (b) (b)
       
Annual retirement income needed from personal savings and investments      
Subtract (b) from (a) $10,500  
Inflation Factor   (example assumes 25 years to retirement) x2.09

      5 10 15 20 25 30 35 40

Inflation Factor

How many years until you retire?

*
Income needed from savings/investments $21,945  
       
Total amount of personal savings and investments needed by retirement      
Income from savings/investments (above) $21,945  
Payout Multiplier    (example assumes a 20-year retirement period) x14.88

      10 15 20 25

Payout Multiplier

How many years will you be in retirement? The multiplier assumes a 3 percent after-inflation annual return. Your returns will differ.

 
Targeted total savings/investments $326,542 (c) (c)
       
Future value of any assets you now own that may be available for retirement      
Value of assets today $40,000  
Growth Factor   (example assumes 25 years to retirement) x4.29

      5 10 15 20 25 30 35 40

Growth Factor

How many years until you retire?

**
Value of assets at retirement $171,600 (d) (d)
       
Amount you should save each month from now until retirement to reach your targeted total      
Difference between (c) and (d) $154,942  
Savings Factor   (example assumes 25 years to retirement) ÷54.86

      5 10 15 20 25 30 35 40

Savings Factor

How many years until you retire?

**
Amount you should save each year in your employer’s plan $2,824
     
Amount you should save each month in your employer’s plan
$235
 

Note: If this amount seems high, don't be discouraged. Remember, this is the monthly amount. You still need to divide this by the number of pay periods in one month. You may have to start your savings program with a smaller amount and increase it over time.

 

* A 3 percent inflation rate is assumed. Actual inflation will be different.
** A 6 percent investment return is assumed. Future investment returns cannot be predicted, and your actual returns and principal value will differ.