Retirement Calculators

This will depend upon many factors, including your rate of return, how much you’ll contribute, and how much your employer will match. Plus, estimates of what you’ll receive monthly will depend upon how many years you’ll have to receive that amount during retirement.
 
You can easily and conveniently experiment with our “401(k) Calculator” to see how you can achieve this goal with your employer-sponsored retirement plan. If your employer offers a choice between a traditional plan and a Roth one, also use this retirement calculator: “Traditional 401(k) or Roth 401(k)?”

Our “Save for Retirement” calculator is quite robust and is an excellent tool for this kind of planning. You can enter information about your retirement plans and assets along with some assumptions, including your life expectancy, annual salary increases, inflation rate, and rate of return. Not only will this demonstrate how much you’d save under this plan, but it will also show what you’d need based on the inputs about your anticipated lifespan and spending needs during your retirement years.
 
Underneath the planned savings and required savings amounts, the calculator will tell you if you’d meet your requirement goal number or if you’d need more. If your employer provides a 401(k) plan, this can be an excellent alternative in your retirement planning toolbox. Use the “401(k) Calculator” to experiment with options. Are you choosing between a traditional or Roth? Use the “Traditional 401(k) or Roth 401(k)?” calculator to explore what’s best for you.

When it comes time to withdraw money from your IRA, post-retirement, you’ll have certain rules to follow. For example, when you reach a certain age, the IRS will require you to take minimum distribution amounts from that point forward. What that amount will be depends upon the balance of funds in your retirement account and your years of life expectancy remaining.
 
As long as you meet that minimum amount, though, you can withdraw beyond that according to your needs—and the 95% rule is an often-discussed philosophy on how to do that. Each year, you’d calculate 4% of your portfolio value. Then, either withdraw that amount or 95% of what you took out the previous year—whichever is bigger. This allows you to consistently live your lifestyle without significant risk of running out of retirement funds.
 
Bob Clyatt developed this strategy in a book titled Work Less, Live More and has been tweaked since in various iterations.

If your employer offers both types, then this is a strategy to consider because this is a more diversified, tax-wise approach. When it comes time to withdraw retirement funds—and you have invested in both types—some will be taxable (from the 401(k)), and some will be tax-free: from the Roth 401(k).
 
You might then decide, for example, to take your minimum required distributions from the traditional plan and pay income taxes on those annual withdrawals. When you want additional funds that year, take them from the Roth 401(k). Because you’ve already paid income tax on the funds you contributed to the Roth in the contribution years themselves, you won’t pay any when you withdraw them during your retirement. So, you could build that brand new deck for enjoyable family cookouts on tax-free funds!
 
Reducing your marginal income tax bracket during retirement years could come with additional benefits, too: lowering your Medicare premium amounts, the tax rate on your Social Security benefits, and tax deductions based on your taxable income. Each situation is unique, so be sure to have good guidance as you craft these strategies.

Three common types of retirement income include Social Security benefits, pension plans from employers, and retirement accounts such as traditional or Roth IRAs and employer-sponsored 401(k) plans. In addition, there may also be income from non-retirement savings accounts, which can include investments that pay dividends and certificates of deposit and savings account interest.

• Social Security benefits are calculated on income earned during your working years.

• A pension plan is a type of retirement savings typically funded by an employer, based on the employee’s income earned and years of service in the company. Payouts usually start upon retirement; pension funds aren’t as common as they used to be and generally aren’t portable. So, when leaving a job that pays a pension, the money can’t typically be rolled into another account. Employees may be given a lump sum payment when leaving the job with a pension account, or the funds may simply sit there until an employee starts receiving benefits upon retirement.

• The third type of retirement income, IRAs/401(k)s, are ones in which you participate and contribute to—up to the maximum allowable amount as desired. Some years, you may reach that maximum; others, you may not. The main difference between a traditional IRA that SCCU offers and a 401(k) is that the latter is sponsored by an employer and will have some sort of employer matching program. (Note that SCCU also offers IRA CDs.) If you’re able to fund a 401(k) and an IRA, you can do so, and that will help you to more fully realize your retirement savings goals.

“IRA” stands for an “individual retirement account.” You can set one up one at a financial institution like SCCU. IRAs help people save for their retirement needs and wants in tax-friendly ways. Account owners can contribute up to a certain dollar amount each year. Check with the IRS to find out the contribution limit for an IRA.
 
Roth IRAs may have lesser limits based on the person’s income and filing status. You can withdraw from your IRA without penalty at a certain age. If younger than that age, there is a 10% penalty. When you reach a certain age (depending on that year that happened), you’ll be required to take a minimum distribution that’s based on the balance in the fund and your remaining life expectancy.

Retirement planning is very important—your specifics will be unique to you. Factors include your current age, the age you plan to retire, and how much money you’ll need to live the lifestyle of your choice. What you’ll receive in other income, such as your Social Security benefits and any pension or investment income, will also play a role. Some factors are out of your control, such as the inflation rate in the interim.
 
To streamline your planning, use our “Save for Retirement” calculator. This robust retirement calculator takes your retirement plans and assets into account while also factoring in your anticipated life expectancy (which will play a significant role into how much your retirement savings will translate into an annual income), expected salary increases, your rate of return, and the inflation rate.
 
By using this retirement calculator, you can quickly see the results of your savings plan plus what you’ll need for retirement spending. If there’s a gap between what you’ll save and need, you can adjust your plan to fit your situation better.

According to the Social Security Administration (SSA), you need at least 10 working years to qualify for Social Security retirement. The amount you’ll receive in monthly benefits is calculated on the highest wages in a 35-year period. If you work less than 35 years, you’ll receive less than if you’d worked 35 or more years. You can get more information on this topic here. The SSA will adjust those earnings based on changes on average earnings.

The 5-year rule applies to qualifying for and receiving Social Security Disability Insurance—typically referred to as SSDI payments. These payments are hard to qualify for, earmarked for people who cannot work because of conditions expected to continue for more than one year or until death. So, this rule is irrelevant for people who are planning towards and building retirement savings.

First, the earlier you start, the better—because this gives you more time to save and accumulate funds in your retirement accounts. If your employer offers a 401(k), this can be the best way to save because of the employer matching involved. That’s really free money! You can also contribute to an IRA: traditional and Roth ones. Create a plan that helps you to contribute as much as possible up to the annual limits and use our retirement calculators, as appropriate, to formulate your retirement savings strategies. Ready to open an IRA at SCCU? Here are your IRA options!