Transamerica - Retirement Needs Calculator

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Retirement Needs

This calculator helps you to estimate what sort of lifestyle you could have during retirement, by showing you your projected 401(k) account balance both before and during retirement. The goal is to let you experiment with different savings amounts so that you can see what effect they will have on your balance during your years in retirement.

The return on your investments will differ from this illustration due to actual market performance. Investments offering the potential for higher rates of return also involve a higher degree of risk to principal. Both the return and the principal value of investments will fluctuate over time.

Salary:
Enter your current annual salary or annual wages here.
Contribution Percentage:
Enter a percentage between 1% and 25% that represents the percentage of your income that you wish to have withheld for contribution into your 401(k) account. The 2001 elective contribution limit to 401(k) plans was limited to the lower of $10,500 or 25% of annual compensation. Beginning in 2002, individuals may elect to contribute up to 100% of compensation subject to the annual dollar limit for the year concerned (see below) to 401(k), 403(b), and 457 plans.
2002 $11,000 ($1,000) 2003* $12,000 ($2,000) 2004* $13,000 ($3,000) 2005* $14,000 ($4,000) 2006* $15,000 ($5,000) "Catch-up contribution" allowed for those aged 50 and older.
Match Percentage:
If your company matches your contributions, enter the matching percentage it uses (for example, if your company matches 3% of your salary, enter 3 here). If your company does not match, enter zero.
Pre-retirement Interest Rate:
Enter the nominal interest rate you expect to earn on your 401(k) account prior to retirement. To give you two ideas, current CD rates run between 3% and 5%, while an equity investment may provide a 10% average annual rate of return over a long time period. For 6%, enter 6 in the entry field. Typically you would invest more agressively prior to retirement and then move the money to less-risky investments after retiring.
Post-retirement Interest Rate:
Enter the nominal interest rate you expect to earn once you retire. See the previous field for an explanation. You might enter 10 in the previous field and 6 here, for example.
Inflation Rate:
Enter the expected inflation rate during the coming years. 4% is a good average number for the past ten years and would work well here. If you are more pessimistic, choose a higher number.
Salary Increase Rate:
Presumably your salary will rise over the years. It should, at a minimum, rise with the inflation rate in the form of cost-of-living increases. It may rise faster than that depending on the job you hold. Enter the rate at which you expect your salary or wages to increase. If you are unsure, enter the inflation rate from the previous field here.
Current 401(k) Value:
Enter the current value of any 401(k) accounts you have now.
Current Age:
Enter your current age.
Expected Retirement Age:
Enter the age at which you plan to retire. 65 is normal, but you might want to consider early retirement options.
Desired Retirement Income:
Enter the amount of money you would like to have to spend each year during retirement, in today's dollars. For example, if you look at yourself and say, "If I were to retire today, I would feel comfortable if I had $30,000 per year to spend" then enter $30,000 here. Remember that you will have to pay taxes on that amount just like you do today, so take that fact into account. A good ballpark figure recommended by many financial experts is 80% of what you currently make per year. Therefore if your salary is $30,000 now and you feel comortable with that amount, you could enter $30,000 * 80% = $24,000 in this field.

401(k) Account Value at Retirement:
This is the projected total value of your 401(k) account when you retire, based on the data you have entered.
This is the projected value of your 401(k) account at the end of each year in retirement.
1 Year Value:
2 Year Value:
3 Year Value:
4 Year Value:
5 Year Value:
10 Year Value:
20 Year Value:
30 Year Value:
40 Year Value:

Note: This calculator assumes the function of an ordinary annuity, i.e., the money is contributed at the end of the calendar year. Further, the post-retirement income is withdrawn on the first of each month, and the money needed to maintain your standard of living is adjusted for inflation on an annual basis.

This calculator is furnished by Smartmoney. Smartmoney is not associated with Transamerica Life Insurance Company nor any of its affiliates. While Transamerica provides this calculator as a service to its clients, Transamerica does not guarantee its accuracy, nor does Transamerica give tax or legal advice. Clients and prospects must consult with and rely solely upon their own independent advisors regarding their particular situation. The results and explanations generated by this calculator are hypothetical and will vary due to user input and various assumptions. Transamerica does not guarantee the accuracy of the calculations, results, explanations, nor their applicability to your specific situation. We recommend that you use this calculator as a guideline only. A Transamerica representative can help you with the calculator and your results, and answer any questions you may have.

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