- Social Security income
Social Security is based on a sliding scale depending on your income, how long you work and at what age you retire. Social Security benefits automatically increases each year based on increases in the Consumer Price Index. Including a spouse increases your Social Security benefits by 1.5 times your individual estimated benefit. Please note that this calculator assumes that only one of the spouses work. Benefits could be different if your spouse worked and earned a benefit higher than one half of your benefit. If you are a married couple, and both spouses work, you may need to run the calculation twice - once for each spouse and their respective income. This calculator provides only an estimate of your benefits.
The calculations use the 2013 FICA income limit of $113,700 with an annual maximum Social Security benefit of $30,396 per year for a single person and 1.5 times this amount for a married couple. To receive the maximum benefit would require earning the maximum FICA salary for nearly your entire career. You would also need to begin receiving benefits at your full retirement age of 66 or 67 (depending on your birthdate). This calculator rounds your age of full Social Security benefits to the next highest full year. If your birthdate is between 1955 and 1959 your actual full retirement age for Social Security is 66 plus two months for each year after 1954. Your actual benefit may be lower or higher depending on your work history and the complete compensation rules used by Social Security.
- Current age
- Your current age.
- Age of retirement
- Age you desire to retire.
- Household income
- Your total household income. If you are married, this should include your spouse's income.
- Current retirement savings
- Total amount that you currently have saved toward your retirement. Include all sources of retirement savings such as 401(k)s, IRAs and Annuities.
- Rate of return before retirement
- This is the annual rate of return you expect from your investments before taxes. The actual rate of return is largely dependent on the types of investments you select. The S&P 500 for the 10 years ending Dec. 31st, 2012 had an annual compounded rate of return of 7.1%, including reinvestment of dividends. From January 1970 through the end of 2012, the average annual compounded rate of return for the S&P 500, including reinvestment of dividends, was approximately 10.1% (source: www.standardandpoors.com). Since 1970, the highest 12-month return was 61% (June 1982 through June 1983). The lowest 12-month return was -43% (March 2008 to March 2009). Savings accounts at a bank may pay as little as 0.25% or less but carry significantly lower risk of loss of principal balances.
It is important to remember that these scenarios are hypothetical and that future rates of return can't be predicted with certainty and that investments that pay higher rates of return are generally subject to higher risk and volatility. The actual rate of return on investments can vary widely over time, especially for long-term investments. This includes the potential loss of principal on your investment. It is not possible to invest directly in an index and the compounded rate of return noted above does not reflect sales charges and other fees that funds and/or investment companies may charge.
- Rate of return during retirement
- This is the annual rate of return you expect from your investments during retirement. It is often lower than the return earned before retirement due to more conservative investment choices to help insure a steady flow of income. The actual rate of return is largely dependent on the types of investments you select. The S&P 500 for the 10 years ending Dec. 31st, 2012 had an annual compounded rate of return of 7.1%, including reinvestment of dividends. From January 1970 through the end of 2012, the average annual compounded rate of return for the S&P 500, including reinvestment of dividends, was approximately 10.1% (source: www.standardandpoors.com). Since 1970, the highest 12-month return was 61% (June 1982 through June 1983). The lowest 12-month return was -43% (March 2008 to March 2009). Savings accounts at a bank may pay as little as 0.25% or less but carry significantly lower risk of loss of principal balances.
It is important to remember that these scenarios are hypothetical and that future rates of return can't be predicted with certainty and that investments that pay higher rates of return are generally subject to higher risk and volatility. The actual rate of return on investments can vary widely over time, especially for long-term investments. This includes the potential loss of principal on your investment. It is not possible to invest directly in an index and the compounded rate of return noted above does not reflect sales charges and other fees that funds and/or investment companies may charge.
- Percent of income to save
- The percentage of your annual income you will save for your retirement goals.
- Expected salary increase
- Annual percent increase you expect in your household income.
- Years of retirement income
- Total number of years you expect to use your retirement income.
- Percent of income at retirement
- The percent of your household income you will need to have in retirement income.
- Expected rate of inflation
- This is what you expect for the average long-term inflation rate. A common measure of inflation in the US is the Consumer Price Index (CPI). From 1925 through 2012, the CPI has a long-term average of 3.0% annually. Over the last 40 years, the highest CPI recorded was 13.5% in 1980. This is used to calculate increases in your retirement expenses and increases in Social Security.
- If you are married checkbox
- Check this box if you are married. Married couples have a higher maximum Social Security benefit than single wage earners.
|