Knowing how much income you can count on when retired will help you be better able to plan your golden years. If you want to know how to easily calculate your retirement income, then follow the steps below. These steps will help you to come out with a fairly accurate estimate of what your retirement income will be. However, keep in mind that it is often impossible to say with 100% accuracy what one’s income will be. Laws change and often affect both Social Security and Medicare payments. A person who is counting on money from investments may earn either more or less than what they had previously expected. And while inflation is currently predicted to rise by 3% yearly, this figure is just a prediction, not a fact that can be counted on.
First of all, one should write down all of his or her sources of income. Consider money that has been in savings or a 401 (k) account, and then consider monthly pension payments, Social Security payments, disability payments and money earned from investments with fixed interest rates. The website www.socialsecurity.gov has a free estimator that will help one to deduce social security and pension payments. Be sure to read the instructions and follow them in order to get an accurate figure.
A retiree who has invested money in the stock market, Forex market or in variable annuities may be hoping to use the money earned from these investments towards retirement. However, these investments are risky in that one never knows how they will pan out. It is often best to either not count on this money or to come up with a low estimate of how much money will be earned from these investments. If one earns more money than expected, then he or she will have extra money to work with. However, one should never count on money that “may be earned”. Only count on money that is guaranteed income.
In short, a person who wants to calculate his or her retirement income should write down all of his or her sources of income. Make this list as detailed and complete as possible, but only include forms of income that are sure and do not involve stock market fluctuations or other uncertain factors. Social Security, retirement insurance, pensions, a 401 (k) plan, savings accounts, bonds and fixed annuities are all stable sources of income. Add up the total figure and subtract 3% on account of rising inflation. Next, add in conservative estimates of how much could realistically be earned from risky investments such as the ones mentioned above. The last step would be to deduct taxes. The tax burden varies by state; for a listing of taxes levied in each state, visit www.bankrate.com/finance/taxes/check-taxes-in-your-state.aspx.
It is not hard to learn how to easily calculate your retirement income. It is always worthwhile to sit down and see how much money you can count on for retirement. Use the free resources available online and come up with an accurate figure which will help you in your retirement planning.
Free Newsletter Topics
Topic 1 — How to Easily Calculate your Retirement Income in Five Simple Steps
Part II — Tips on How to Easily Calculate Your Retirement Income
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