Think of retirement as a purchase. When you retire, you’re buying a new lifestyle after you stop working.

It’s the most expensive purchase you’ll ever make. In fact, most people have to save up for it through the entirety of their working lives.

The average total cost of retirement is $738,400, according to a report from Age Wave. That’s a lot of money to save.

Thankfully, you have access to dozens of retirement savings vehicles, as well as free online retirement calculators to help you plan your savings.

How much should you save for retirement?

The retirement savings account you choose to invest in, and therefore the calculator you’ll need to use, largely depends on how much you need to save. After all, different savings accounts have different contribution limits, different withdrawal and taxation rules, and so on.

The average age of retirement in the United States is about 60 years old—while the average life expectancy is about 79 years old. (To keep numbers even, let’s say the average life expectancy is 80 years old.)

So as long as you keep your health up, and you plan to save for your retirement throughout your working life to retire on time, you can safely assume you’ll need enough money to cover 20 years. That’s a long time.

The AARP states that there’s a rule of thumb that you’ll need between 70 and 80 percent of your final working income to live comfortably in retirement, more if you plan to travel.

Let’s assume you’ll need 75 percent of your final income. If your annual income before retirement is $50,000, you’ll need $37,500 per year of retirement.

If you retire early at 60 and die when you’re 80, you’ll need $750,000 in savings to live life comfortably after you stop working.

The 401(k) calculator

This retirement calculator will calculate the end balance of a 401(k) — that is, the balance by a user-inputted retirement age — from the following data inputs:

  • the percent amount of your annual salary you plan to contribute
  • the amount of your salary before tax and benefit deductions
  • the percent amount of the annual increase of your salary
  • the age at which you open the account and the age at which you plan to retire
  • the starting balance of the account
  • the expected annual rate of return
  • the percent amount of your contributions your employer will match

To learn more, check out our article on 401(k) plans, why you should invest in them, and how to use 401(k) calculators.

The IRA calculator vs 401(k) calculator

If you’ve shopped around for a 401(k), you’ve likely heard talk of IRAs, too. IRAs are similar to 401(k)s, though they do have a few notable differences.

For a detailed breakdown of the differences between these two popular retirement savings accounts and their retirement calculators, head over to this post.

Overall, a 401(k) calculator isn’t that much different from an IRA calculator: They both calculate an end balance from a summation of annual contributions, expected rates of return, and starting balances over a specified number of years.

One key difference: Since 401(k)s are employer-sponsored savings accounts, their calculators’ key required data inputs are tied to salary and employer contributions while those of IRA calculators are not.

Is an IRA better than a 401(k)?

One isn’t better than the other. In general, if you want more control over your assets, you should opt for the IRA. You won’t have to go through your employer to open one, and you’ll have access to more things in which to invest. On the other hand, your employer may match part of your contributions to a 401(k), which might help you save more.

The military retirement calculator

The military uses several different retirement calculators for each of its retirement pay systems: the Blended Retirement System (BRS), the legacy High-3 (High-36) system, the Final Pay system, and the CSB/REDUX system. For a detailed breakdown of each system, as well as where to find to their respective retirement calculators, head over to this post.

How is military retirement pay calculated?

Each retirement pay system guarantees you a pension calculated from a percentage of your basic pay. Under the BRS, your pay amount is 2% times your number of service years. If you served for 20 years, your pension will equal 40% of your base pay. In addition, your employer will match your contributions to your Thrift Savings Plan (TSP).

Under the legacy High-3 (High-36) system, your pay amount is 2.5% times your highest three years, or 36 months, of basic pay. However, you will not receive matching contributions to your TSP.

Under the Final Pay system, your pay amount is 2.5% of your final base pay times your number of service years. After 20 years, your pay would equal 50% of your final base pay and 100 percent after 40 years.

Calculating retirement pay under the CBS/REDUX system is a little more complicated. After 15 service years, you receive a career status bonus (CSB) of $30,000 before tax. After that, the regular 2.5% per year multiplier is reduced by 1% for each year of service less than 30 years.

The Roth IRA calculator

If a Roth IRA interests you as your retirement savings vehicle of choice, then you’ll want to check out this calculator which will determine the balance of a Roth IRA by a desired retirement age from the following data inputs:

  • your starting account balance
  • your expected annual contributions
  • your age at account opening and retirement
  • your expected rate of return
  • your marginal tax rate—the tax rate you expect to pay on your taxable investments

Traditional IRAs and Roth IRAs are different in the way they’re taxed:

Traditional IRAs: Allow you to deduct contributions from your income tax, but your retirement withdrawals are taxed as income.

Roth IRAs: Allow tax-free retirement withdrawals if your account is 5 years old and you are 59 and one-half or older. You contribute to your Roth IRA with after-tax dollars, so you won’t be taxed twice.

You can head over to this post to learn more about Roth IRAs, why you should invest in one, and how to use a Roth IRA calculator.

The health savings account calculator

As an overlooked triple-tax-advantaged savings vehicle, HSAs are starting to turn some heads. Even though HSAs are designed to help you pay for out-of-pocket medical expenses, you can use them for whatever retirement expense you want if you’re 65 or older. (To open an HSA, you need a high-deductible health plan.)

Like a 401(k) or traditional IRA, HSAs allow you to deduct contributions from your income tax and your investments to grow tax deferred. On top of that, as long as you’re 65 or older, you’ll pay no tax on withdrawals.

To use a health savings account calculator, you’ll need to fill in the following data inputs:

  • your annual contributions
  • your expected annual medical expenses
  • your age at account opening and retirement
  • your federal income tax bracket
  • your state income tax bracket
  • your expected rate of return

Check out this guide on HSAs and HSA calculators to learn more.

The annuity calculator

Annuities aren’t savings accounts in the traditional sense—they’re financial contracts between insurance companies and annuity buyers, called annuitants.

Under an annuity contract, you pay an insurer a single large payment or series of payments over a specified period of time in return for a series of payments made back to you at some point in the future.

The insurer invests your payments to grow the value of the annuity so that you make your principal plus gains during the payout phase.

There are different types of annuities to choose from and annuity calculators to use, which we look at in this article. Annuity calculators require most of the data types you would expect any other retirement calculator to require:

  • your starting balance
  • your annual contribution amount
  • your age at account opening and withdrawal
  • your tax rates on investments now and in retirement
  • your expected rate of return

What sets these calculators apart from others is your starting balance amount. It will be much larger since most annuities require a larger investment up front.

Also, you’ll need to know your annuity’s guaranteed interest rate and average interest rates after the guarantee ends, if it does (for fixed annuities only).

Annuities are good investments for retirement. Far and away, the feature that attracts investors to annuities the most is that they can provide a guaranteed stream of income in retirement.

The bottom line

If, after reading this, you’re not sure which retirement savings account will help you achieve your retirement goals, talk to a certified financial planner today, and start investing as soon as you can. The earlier you start and the more you invest, the more money you’ll have to enjoy the best years of your life.

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