A retirement calculator can help you plan

Some people avoid thinking about saving for retirement, but a retirement calculator can make it easier to plan for your future. The earlier you begin saving for retirement, the better. But financial experts say that individuals in their 50s and 60s can save a substantial amount in a retirement fund even if they have little or no savings to start.

Budget basics

Before you can use a retirement calculator to estimate how much you need to save to provide the income you will need during retirement, it's best to calculate your current budget. You need to know where your income is going, how much you are investing in your retirement and an average rate of return on those investments. Think carefully about when you would like to retire and how long you expect to be retired.

Next, consider your anticipated income needs during your retirement years. While some retirees find their budget shrinks during retirement, others say that, at least initially, they spend more on leisure activities and travel. As they age, the financial needs of retirees shift.

You may be planning on paying off your mortgage in full before retirement, but don't forget you will still need to pay property taxes and homeowners insurance and perhaps a homeowners association fee. An accurate budget, both current and estimated, will help improve the accuracy of your retirement planning calculation.

Estimating your savings

How much you should be saving towards retirement depends in part on your age, which the retirement calculator takes into account. Financial planners recommend that you contribute the maximum you can to your 401(k) retirement account -- or at least enough to get all of the company match if your employer matches contributions. If you are age 50 or older, you can make a "catch-up" contribution of an additional $5,500 to an IRA beyond the regular limit.

A retirement calculator works only as well as the numbers you put into it, so do your best to estimate how long you will be retired to determine your income needs.

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