Ballpark

Planning for retirement is not a one-size-fits-all exercise. The purpose of Ballpark is simply to give you a basic idea of the savings you'll need when you retire.
So let's play ball!

1. How much annual income will you want in retirement? (Figure 70% of your current annual income just to maintain your current standard of living. Really.)

2. Subtract the income you expect to receive annually from:

Social Security

If you make under $25,000, enter $8,000; between $25,000 - $40,000, enter $12,000; over $40,000, enter $14,500

Traditional Employer Pension -- a plan that pays a set dollar amount for life, where the dollar amount depends on salary and years of service (in today's dollars)

Part-time income

Other

This is how much you need to make up for each retirement year:

Now you want a ballpark estimate of how much money you'll need in the bank the day you retire. So the accountants went to work and devised this simple formula. For the record, they figure you'll realize a constant real rate of return of 3% after inflation, you'll live to age 87, and you'll begin to receive income from Social Security at age 65.

3. To determine the amount you'll need to save, multiply the amount you need to make up by the factor below.

Age you expect to retire: 55
60
65
70 Your factor is: 21.0
18.9
16.4
13.6

4. If you expect to retire before age 65, multiply your Social Security benefit from line 2 by the factor below.

Age you expect to retire: 55
60 Your factor is: 8.8
4.7

5. Multiply your savings to date by the factor below (include money accumulated in a 401(K), IRA, or similar retirement plan):

If you want to retire in: 10 years
15 years
20 years
25 years
30 years
35 years
40 years Your factor is: 1.3
1.6
1.8
2.1
2.4
2.8
3.3

Total savings needed at retirement:

Don't panic. Those same accountants devised another formula to show you how much to save each year in order to reach your goal amount. They factor in compounding. That's where your money not only makes interest, your interest starts making interest as well, creating a snowball effect.

6. To determine the ANNUAL amount you'll need to save, multiply the TOTAL amount by the factor below.

If you want to retire in: 10 yrs.
15 yrs.
20 yrs.
25 yrs.
30 yrs.
35 yrs.
40 yrs. Your factor is: .085
.052
.036
.027
.020
.016
.013

See? It's not impossible or even particularly painful. It just takes planning. And the sooner you start, the better off you'll be.

This worksheet simplifies several retirement planning issues such as projected Social Security benefits and earnings assumptions on savings. It also reflects today's dollars; therefore you will need to re-calculate your retirement needs annually and as your salary and circumstances change. You may want to consider doing further analysis, either yourself using a more detailed worksheet or computer software or with the assistance of a financial professional.

3. To determine the amount you'll need to save, multiply the amount you need to make up by the factor below.
Age you expect to retire: 55 60 65 70	Your factor is: 21.0 18.9 16.4 13.6
4. If you expect to retire before age 65, multiply your Social Security benefit from line 2 by the factor below.
Age you expect to retire: 55 60	Your factor is: 8.8 4.7
5. Multiply your savings to date by the factor below (include money accumulated in a 401(K), IRA, or similar retirement plan):
If you want to retire in: 10 years 15 years 20 years 25 years 30 years 35 years 40 years	Your factor is: 1.3 1.6 1.8 2.1 2.4 2.8 3.3
Total savings needed at retirement:

1. How much annual income will you want in retirement? (Figure 70% of your current annual income just to maintain your current standard of living. Really.)
2. Subtract the income you expect to receive annually from: Social Security If you make under $25,000, enter $8,000; between $25,000 - $40,000, enter $12,000; over $40,000, enter $14,500
Traditional Employer Pension -- a plan that pays a set dollar amount for life, where the dollar amount depends on salary and years of service (in today's dollars)
Part-time income
Other
This is how much you need to make up for each retirement year:

6. To determine the ANNUAL amount you'll need to save, multiply the TOTAL amount by the factor below.
If you want to retire in: 10 yrs. 15 yrs. 20 yrs. 25 yrs. 30 yrs. 35 yrs. 40 yrs.	Your factor is: .085 .052 .036 .027 .020 .016 .013