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Crunch the Numbers: Retirement Calculators & Estate Planning

Sarah is 35 years old, single and a full-time professional who loves to travel. She is starting to think about how she wants to spend her golden years. Sarah feels financially stable with her annual salary of $75,000 and her monthly contributions to her savings, but she wants to better understand her options so she can plan for a life of adventure.

According to the website Can I Retire Yet?, there are more than 80 online retirement and financial calculators available to help people make crucial life decisions and plans. These tools, the best of which Can I Retire Yet? lists, consider economic and lifestyle to provide financial estimates for retirement at various ages.

These calculators — especially when coupled with advice from a professional financial planner — are extremely useful. However, that is only one piece of the retirement planning puzzle. When thinking about retirement and future finances, be sure to incorporate estate planning. There are certain considerations, such as inheritance taxes and charitable giving, that can impact long-term financial plans.

Retirement Calculator in Use

Returning to Sarah, let’s see what happens when she uses a retirement calculator from smartasset.com. First, she enters her financial profile and other information, including an estimated life expectancy of 85 years old. Then she runs three scenarios for different retirement ages:

  • Retirement at 55: She plans to travel extensively in her first retirement years and expects she’ll have limited living expenses. Retiring at age 55, according to the retirement calculator, requires $1.8 million to sustain a $50,000 annual income over 30 years. To reach this goal, Sarah realizes she’ll need to increase her contributions to her savings and probably downsize her home.
  • Retirement at 65: Sarah envisions a slower pace of travel, coupled with volunteering and local activities. This would require a $1 million nest egg for a $40,000 annual income over 20 years. Sarah feels this scenario aligns with her current savings rate and allows for some flexibility.
  • Retirement at 70: With continued career fulfillment and potential inheritance, Sarah aims for a luxurious lifestyle with frequent international trips. Both her continued income and projected inheritance reduce the required savings to $700,000 for an $80,000 annual income over 15 years. While this scenario sounds luxurious, it does rely on uncertain factors (the inheritance) and that she continues to work much longer than she’d prefer.

Sarah’s retirement calculator example was simple and didn’t account for variables such as children, caring for aging parents, a spouse, investments or the possibility of unforeseen medical bills. Life is always full of surprises, but creating a financial retirement plan early that can be adjusted as needed is the best way to be prepared for both the unexpected and for the life you want.

Retirement Calculator

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