Description: The article below concentrates on the topic of retirement calculator. This retirement calculator helps you plan your retirement budget and schedule by incorporating information about your real estate investments, your stocks, bonds, funds investments, your plans for future investments, possible inheritance or company sale.
Sector Surfer’s online retirement calculator was designed for a simple organization and to be the most comprehensive online retirement calculator you will find, everything is in a single view, your real estate summary, financial assets summary, new savings summary, retirement investment style, current investment style and such information as your current age, retirement age, how long you think you’ll live, social security, inflation, taxes and others.
Finally when everything is entered, you can see your annual retirement budget and see a graphic chart of it, alternatively by clicking the table button you can see the year-by-year detail of your plan, the first time you come to my retirement calculator, the example values and options you see are what will be used as your starting point.
After you have changed values and click the Save button at the bottom, the next time you return, your saved results will be your starting point, let’s do a specific example, starting with your real estate you enter your real estate ownership information.
There is a column for your home and another column for other property you might own, if you own more than two properties, you lump all of the others together in the second column, all values are entered in thousands of dollars, in this example the market value of your home is 250 thousand dollars.
If the remaining mortgage is $200,000, then the equity would be the difference between them which is $50,000, if your monthly payment principal plus interest is fourteen hundred and twenty dollars, when multiplied by 12, you get seventeen thousand and forty dollars round to the nearest thousand and enter 17.
The last line specifies the number of loan years left during which you will make payments, in this example it is fifteen years, these last two amounts matter particularly for the apply mortgage check box on the lower left, more about that later, let’s say you have a second property, perhaps a cabin in the woods, let’s say that property is worth one hundred and seventy five thousand, you have twenty five thousand equity.
Your payments per year are 11,000, you have 22 years left on the loan, let’s click recalculate, we have a new result, in this section you enter your current financial asset information, your savings and investments to date, your data is being either in a tax-free or taxable account.
Generally they will be taxable unless the assets are in a tax deferred retirement account such as an IRA, 401k, 453 B or 457 B plan, do your best to separately identify funds held in each of the asset classes of money market, bonds, stocks and mutual funds.
Data is scaled in thousands of dollars, this calculator will use this as your initial asset allocation and then modify it going forward according to the selections made in the frames below for allocation before retirement and allocation after retirement.
In this section you enter new savings that you plan to invest, the column entitled this year specifies the amount you plan to save this year, the column entitled final year specifies the amount you plan to be able to save on the final year before retirement in today’s dollars.
For simplicity the calculator assumes that between this year and the final year you will linearly wrap up your savings year by year, hopefully you will be able to save more as your career progresses, separate your savings into taxable and tax-free amounts.
On the last line provision is made for the possibility that you will come into a sum of money in the future, either through inheritance or company sale, in these two sections you specify how you would like the calculator to model investing your assets in the period before retirement and in the period after retirement.
Click the radio button in each that most closely indicates your intention, this choice allows you to continue with the same balance of asset classes that you specified up here, the next three choices are various allocations typical of what might be offered to you by a financial advisor practicing the diversify and rebalance mantra of the financial industry’s modern portfolio.
The average investment return shown for each is based on long-term average returns for its particular mix of asset classes, the fifth choice is to use the ten-year rate of return from your sector surfer strategies page, these choices enabled you to experiment with different investment styles and see the effects on your projected retirement budget.
Note that when the radio button for neutralized inflation is selected, these values will be reduced by the amount you entered for the estimated inflation rate here, a variety of important planning information is entered in this section, in the first three boxes you enter your current age to age you plan to retire and how long you think you will live.
The calculator uses this information to determine how many investment years you have before retirement and how many years to make your money last after retirement, next you can change the estimate for future inflation although it has averaged two and a half percent for many decades, you may be inclined to adjust it a bit according to your personal outlook.
The calculator assumes for simplicity that you will start taking your Social Security retirement benefits at age 65, the annual statement you receive from the Social Security Administration indicates the amount you can expect, you may want to adjust it down a bit, if you lack confidence, it will be fully funded.
Enter the amount scaled in thousands of dollars per year, your average tax rate might be lower in retirement than it is now, unless you do well investing and have a very large retirement budget, your average tax rate is not the marginal rate you pay on the last dollar earned.
If you earned a hundred thousand dollars and paid 18 thousand dollars in taxes, your average tax rate is 18%, when your real estate mortgage is fully paid, the apply mortgage check box allows you to direct the amount of your mortgage payment to additional savings in order to help you beef up your retirement savings in later years.
Finally this check box allows you to model the use of a reverse mortgage to slowly take equity back out of your real estate in order to supplement your retirement income, inflation often are numerical perception of the future to alleviate that problem.
This calculator has a feature that enables you to neutralize inflation or show everything with inflated dollars, by neutralizing inflation you can evaluate your retirement budget in constant dollars, this is accomplished by subtracting the estimated inflation rate, entered above from the nominal value of average return selected in each of these sections.
As you change your selection, you will see the returns here, change and back again, you’ll see your retirement budget change, now you have a tool to make a meaningful plan, so let’s get sector surfer and make it come true.