Retirement Funding CalculatorDo you have enough funds set aside to fund your retirement income needs? This calculator makes it easy to quickly check how much one needs to have saved up given an anticipated income need over a period of time at a set rate of return. Calculations happen automatically when any variable is changed. You can use this calculate if you have enough money set aside for retirement, or to estimate the present value of an annuity investment.
Guide published by Joelle Jacinto on November 27, 2019
How much has America saved for retirement? Many are alarmed to answer “Not much.”
5,923 workers participating in the 19th Annual Transamerica Retirement Survey saved a median of $50,000.
They categorized respondents according to age, into these specific 3 brackets:
Boomers have the highest savings with an estimated median of $152,000. Considering this group is the nearest to their retirement age – those born in 1946 are 73 and should be retired – this is quite off the projected recommendation made by Fidelity. They suggest you should save 7 times your salary by the age of 55, and 10 times your final salary by the age of 67. $152,000 is only 266% of $57,148, the current estimated median income Americans earn at ages 55-64, according to the U.S. Bureau of Labor Statistics.
Generation X has an estimated median of retirement savings of $66,000, which is not much higher than what the average 55-64 year old earns. Millennials are reported to have saved a median of $23,000. This is actually well within Fidelity's recommended of saving half of your annual salary by age 30. Only 9% of millennials have retirement as their top priority. It doesn't seem that this mindset improves over time, given that only 38% of Boomers and 29% of Gen X-ers rank retirement first.
Please note the above bracketing differs from typical generational delliniated.
| Generation | Born After | Born Before |
|---|---|---|
| Millennials | 1979 | 1995 |
| Generation X | 1964 | 1980 |
| Baby Boomers | 1945 | 1965 |
The Transamerica survey discovered 65% of respondents look forward to working past the age of 65, or planning not to retire at all. Figures rise to 69% for Boomers, some of whom are already past 65 years old, are still working. 55% of all respondents expect to continue to work in retirement, with 14% planning to work full time, mostly Gen X-ers and Millennials. It is unsurprising they have saved so little, believing they have many opportunities for post-retirement income.
Many believe that the cost of living goes down after retirement, though the differences are not that wide. Even as some expenses like mortgage payments, commuting to work, and your child's college fund disappear, health and medical expenses rise dramatically.
To adjust your finances and save for your retirement you should figure out your future living expenses. Start with your current living expenses and compare and contrast. Bureau of Labor Statistics show the following median monthly expenses for retired households:
| Expense | Amount |
|---|---|
| Housing | $1,322 |
| Transportation | $567 |
| Healthcare | $499 |
| Food | $483 |
| Utilities | $317 |
| Pensions and Insurance | $237 |
Figures vary between households based on factors including
Let's compare these figures to an estimate of current pre-retirement expenses (data from the Consumer Expenditure Report of 2018 from the Bureau of Labor Statistics):
| Basic Necessities | Current Budget | Retired Budget |
|---|---|---|
| Housing | $1,750 | $1,322 |
| Transportation | $833 | $567 |
| Healthcare | $333 | $499 |
| Food | $685 | $483 |
| Utilities | $337 | $317 |
| Pensions and Insurance | $625 | $237 |
| Totals | $4,226 | $3,108 |
The monthly expense of retired Americans is 26% lower than the average expense of workers.
Add in optional expenses that may vary according to what kind of lifestyle you wish to lead during your retirement. Here is a sample of possibilities added to the basic list, with an estimated budget for each.
| Optional Expenses | Amount |
|---|---|
| Entertainment | $216 |
| Clothes/Apparel | $80 |
| Travel | $300 |
| Education | $32 |
| Home Repairs | $500 |
| Optional Expenses Subtotal | $1,128 |
| Basic Necessities Subtotal | $3,108 |
| TOTAL Monthly Budget | $4,236 |
The figures in the optional expenses list are variable. You need to decide how much money to budget for each, or do away with them altogether.
Other considerations to fit into your retirement include:
Now that you have a rough estimate of how much money you will spend monthly, let's see how much you should save to afford this leisurely lifestyle.
| Estimated Income | Amount |
|---|---|
| Retirement Plan Withdrawals | $2,500 |
| Social Security benefits | $1,445 |
| Total | $3,945 |
Let's assume you withdraw $2,500 monthly from your IRA or 140(k), and you are eligible for Social Security benefits worth $1,445. The total adds to $3,945, fitting your basic necessities budget, but not enough to fund all the optional expenses. You then decide how to adjust, or look for means to add to your income.
This is assuming that you will be able to withdraw $2,500 from your current retirement plan. You can use the calculator above to check how much money you should have saved to be able to withdraw this amount for a desired length of time. For example, according to the calculator, if you wish to be able to withdraw $2,500 per month for 20 years, you need $450,777.29 in savings.
66% of the Transamerica survey respondents shared they feel they would never save enough by the time they reach the age of 65. Broken down by age, that's 77% of Gen X-ers, 65% of Millennials and 58% of Boomers. If you are counting yourself as part of this group, don't worry; the fact that you're reading this means you are addressing your financial issues. Now, go over your budgets again and see how you can catch up.
Joelle sees writing as a craft, and is genuinely interested in the topics she tackles, which have ranged from finance and transportation, to pop music, to business advice, to society and culture, to performing arts. She has a Master's in Art Theory and Criticism from the University of the Philippines and is pursuing a PhD in Philippine Socio-Cultural Studies. Her works have been published in broadsheets, lifestyle magazines, online portals and academic journals. Her performing arts reviews have been published in Malaya, Manila Times, Critics Republic, Malaysia, and RealTime Arts, Australia, while her academic work appears in The Borneo Journal and the Journal for the Anthropological Study of Human Movement.
