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What does your ideal retirement look like? Does it include traveling, spending more time with family and friends, finding new hobbies, pursuing volunteer work or even starting a new business?
Does it also include having enough saved to provide for the lifestyle you’ve grown accustomed to throughout your professional career? Figuring out what you need for financial security in retirement is important, but it’s sometimes hard to know where to begin.
An April 2019 Transamerica Retirement Survey of Workers asked approximately 5,000 US workers, across multiple generations, to estimate the amount of money they need to save before they retire in order to feel financially secure. Approximately 46 percent of the workers who provided a response indicated they guessed their retirement savings needs. Only 12 percent of those who provided a response used a retirement calculator or completed a worksheet to more accurately estimate their retirement savings needs.
One way to estimate your retirement financial needs is to use online retirement planning tools, such as retirement calculators or budget worksheets.
Simple retirement savings calculators can help you estimate how long it might take to reach your retirement savings goals. These types of calculators might ask you about the financial amount you currently have set aside, amount you wish to accumulate, monthly investment you want to start adding and expected annual interest rate.
If you decide to use a retirement calculator, it’s important to remember the calculators are providing hypothetical data; future performance of any investments cannot be predicted with certainty. The rate of return on long-term investments has the potential to fluctuate over time.
IRAs, annuities, and 401(k) accounts allow funds to grow on a tax-deferred basis throughout your professional career. But, you might have other long-term investments that are taxable on an annual basis. Taxable vs. tax-deferred calculators can help you determine if utilizing a tax deferred vehicle is your best option.
If you’ve set your sights high on retirement savings, you could always take a look at a millionaire calculator. This type of calculator will help figure out the amount of time it will take for you to save a million dollars, based on your existing savings and future monthly deposits.
Once you reach a certain age, you are generally required by the IRS to begin taking a required minimum distribution (RMD) from your qualified retirement plans each year. If you were born June 30, 1949, or earlier, the IRS requires you to begin taking RMDs once you reach the age of 70 and a-half. If you were born July 1, 1949, or later, the IRS requires you to begin taking RMDs once you reach the age of 72.
An RMD calculator can help you estimate your future RMD amounts based on the amount in your current qualified retirement accounts, as well as the future growth of your retirement accounts.
The CARES Act waives certain RMDs during 2020. For more information on the CARES Act, please click here.
Mobile apps and worksheets
According to the Transamerica Retirement survey, the top retirement fear across the generations of workers surveyed was outliving savings and investments.
In addition to retirement calculators, there are also free mobile apps that can help you plan for retirement. One example is Intuit’s Mint, which can help as a financial planning tool and assist with maximizing your long-term investments.
If you’re interested in breaking down your future retirement finances and getting a summary of results for annual retirement income required, there are also budget worksheets available online. If you are familiar with Microsoft Excel, you can access templates to retirement budget planners and record your financial estimates in a detailed and organized manner.
Keeping your information secure
When using online financial tools or mobile apps, always be vigilant about keeping your private information safe and secure. Cyber criminals are always finding new ways to take advantage of personal and financial information.
Keep up to date on security tips and how to keep data safe, including keeping passwords private, using anti-virus security software, avoiding phishing emails sent by fraudsters, staying protected while using public Wi-Fi, and locking your laptop.
You have a lot to look forward to in retirement. Utilizing online retirement tools and mobile-friendly apps is one way to start figuring out your long-term retirement goals and making sure you have the guaranteed lifelong income you need.
The content provided is for informational purposes only and does not constitute advice. For specific details on how this may apply to your personal situation contact your personal financial advisor or insurance agent for more details. American Equity contracts are only sold through independent agents. Please contact your state insurance department to see if there is an independent insurance agent in your area appointed to sell American Equity annuity contracts.
American Equity Investment Life Insurance Company® does not offer legal, investment, or tax advice. Please consult a qualified professional.