STUDENT RETIREMENT CALCULATOR
This calculator works best on a PC or Mac
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WE ARE NOT A FINANCIAL PLANNER NOR DO WE KNOW ALL ASPECT OF YOUR FINANCIAL FUTURE. WE PROVIDE THIS TOOL FOR REFERENCE AND EDUCATION AND SUGGEST ALL INVESTMENT ADVICE BE LEFT TO QUALIFIED PROFESSIONALS.
Student Retirement Calculator
Powered by: LearnEarnRetire © LLC (Assumes you have a 401k Plan)
This product is still under development.
We would very much appreciate any and all feedback on how we can make this better. Thank you.
DISCLAIMER: This calculator and informaon are made available to you as enlightenment tools for your independent use and are not intended to provide investment advice. We cannot and do not guarantee their applicability or accuracy in regard to your individual circumstances. All examples are hypothecal and are for illustrave purposes. We encourage you to seek personalized advice from qualified professionals regarding all personal finance issues.
This calculator is designed to give you a potenal esmate as to your future and financial well being in three easy graphs:
You can read these instrucons or scroll down and jump in, and at the end you can send a PDF of results to yourself. You can only input in the yellow boxes.
•The following instructions are meant to get you started quickly. Soon we will provide an advanced guide and additional support in the Links & Resources tab at LearnEarnRetire.com
PayScale.com’s College Salary Report
My Favorite Financial Experts
Quick Start Instructions
→ Begin with a simple plan:
Age to begin, compensation estimates, employee match (if there is one)
We have set some reasonable defaults that you can adjust later
1. Deterime your early and mid-career compensation:
• If you are a college student or recent graduate, go to PayScale's College Salary Report to determine what your early and mid-career earnings will be based upon the college you graduate(d) from.
• If you are going straight from high school to the workforce: Find realistic information on new hire and mid-career earnings through research.
→ You can also get these estimates from a seasoned professional in the field you are entering
2. Enter your "Salary Information" (using estimates you just determined)
• Early Career Pay - This is calculated by PayScale.com as the median pay for alumni with 0-5 years out of college.
• Mid-Career Pay - This is calculated by PayScale.com as the median pay for alumni with 10+ years out of college.
→ The calculator can run 5 scenarios so that you can compare different options. For your convenience and to remove clutter, only the first column is turned on. If you want to activate columns 2-5 you can turn any of them on at the top of that column. Then you can overwrite any variable on in a yellow box to compare choices.
→ We suggest starting off with one column and then adding more as you analyze deeper. Remember you can send a PDF (last page) to your email.
3. Enter your "Contribution Decisions":
• Starting Age of Contributions into Retirement Savings
• Ending Age of Contributions into Retirement Savings
• Retirement Age • Starting Contribution Percentage (% of pre-tax salary)
• Goal Contribution Percentage (% of pre-tax salary)
4. Then the calculator begins to work its magic:
→The next cell, "Estimated Full Years to Goal Contribution Percentage," is calculated automatically. This is the number of full years it will take you, starting in the year at which you make your "Starting Contributin Percentage," until you reach your "Goal Contribution Percentage" if you apply all of your raises to your retirement plan and enjoy the benefits of early aggressive compound interest.
→We strongly urge you to consider this strategy. After you employ this strategy, if you have determined that say 15% of your compensation will go towards retirement, 85% of every raise thereafter goes to your lifestyle and 15% would go to retirement.
•If you say "YES, I want to employ this strategy and forgo all my raises to reach my goal contribution percentage" enter the already calculated "Estimated Full Years to Goal Contribution Percentage" (If Forgo Raises) as your "Full Years to Goal Contribution Percentage".
•If you say "NO, I will give some of my raises to retirement but not all (in the early years)" you can manually insert the number of years you want to get from your starting contribution percentage to your goal contribution percentage into the cell "Years to Goal Contribuiton Percentage".
5. Enter your "401(k) Employer Matching Criteria":
• If the employer matches your contributions, enter the maximum percent they will match.
◦ Example: The employer matches 100% of the first 6%. If this is the case, you would:
◦ Enter 100% in the cell: Employer Matching Rate
◦ Enter 6% in the cell: Employer Matching Maximum
• If the employer does not match, leave these cells blank.
6. Enter your "Investment Assumptions":
• In the "Annual Rate of Return on Retirement Investment (%)" cell you can put in the average estimated rate of return you expect from your investments (usually in equities) over the course of your career.
→ We place a default estimate of 7.0 percent.
RETIREMENT INVESTMENT VALUE AND ITS COMPONENTS
(at retirement age)
• These automatically calculated boxes below show a summary of contributions
• The chart below shows a bar graph of outcomes from the variables you submitted.
◦ How much you invested
◦ How much your employer invested (if applicable)
◦ How much your money grew from the parameters you input
(The box at the bottom of the chart shows the total for each column)
- This assumes you continually deposited money into your 401k
- This aslo assumes you did not deplete or borrow against that plan
(it would be wise to do both)
RETIREMENT WITHDRAWAL ANALYSIS
This area allows you to: 1. Enter your "Annual Rate of Return on Retirement Investment during Retirement" 2. Change your investment assumptions during retirement 3. Set the percentage that you want to take out annually from your portfolio 4. Add a cost of living adjustment to factor in inflation
Quick Tip:- Typically financial professionals advise retirees to trade lower return on investment in exchange for lower future volatility because they are drawing off of their portfolio.
• On the next page is a very revealing chart. Most students do not know what to do with, or how they could manage, the financial nest egg they will have accumulated over the course of their career. Toward a deeper level of understanding we show:
◦ Estimated final years of compensation
◦ What you would be extracting from the input you rendered
◦ A percentage of how those two amounts differ
• This shows the estimated amount of your portfolio over time, given the choices you have made.
- Most people know you can predict what you spend, but not how long you will live.
FINAL NOTES & ADVICE
We are so glad you are working with the calculator. A recent Transamerica research study said, 60% of Americans have a retirement strategy, but only
12% have written it down. The majority of the previous generation, the Baby Boomers, failed to adequately fund their retirement. When they were
your age they did not think this would be them:
• Of people in America currently that are 46-64 years old:
◦ 23% have no retirement savings/investments
◦ 46% have less than $10,000 in savings/investments
◦ 60% have less than $25,000 in savings/investments
• The average person at retirement has:
◦ 3 times their last year's compensation in their 401k account
• Yet the experts say they need:
◦ 6 to 8 times their last year's compensation in their 401k account
◦ Therefore they are unfunded by more than half
Most early employees do not adequately fund for their retirement because:
1. They are so confused by the topic that their eyes glaze over and they end up doing less than they could, and less than they should.
2. They think "When I make some real money, I will start"
BOTH ARE HUGE MISTAKES!
1O TIPS FOR THOSE STARTING OUT:
1. Begin to save and invest immediately
2. The experts say to get to a number of 12-15% of your income as soon as you can
3. The most important thing is to start now and build from there
4. Set an initial percentage at LEAST to the maximum of the match if your employer offers one
5. Target a goal percentage to get to over time
6. Hold your lifestyle flat, and put every dollar of every raise towards getting to your goal percentage until you reach it
7. After that, with every raise, 85% go to enhancing your lifestyle and 15% go into your 401k or other investments
8. Then take the pledge to yourself: I WILL NEVER INVADE OR BORROW AGAINST RETIREMENT ASSETS AND DIVERT THOSE FUNDS TO NEAR-TERM EXPENSES
9. If you get into debt trouble, search for Dave Ramsey Debt Snowball and follow his Baby Steps
10. Read one financial book a year and expand your mind
The fact that you are here is abnormal, and that's a good thing. The opposite of success is not failure, but conformity. Starting now is abnormal, or to
put it another way, exceptional. Wear it well. You are on your way.
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