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Calculating Retirement Savings

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Updated January 13, 2022

Allyson Krause CRPP™, Managing Director Retirement Plan Services

How to determine how much money you’ll need to live the life you want in retirement.

Throughout our working lives, we dutifully set money aside for retirement, whether through a 401(k), traditional IRA or Roth IRA, or other savings strategy. The goal, of course, is to have enough savings to retire when we want and finally do the post-work things we’ve long-planned for (and maybe dreamt about).

There’s much to consider when determining how much you need to save for retirement. Your retirement goals, daily expenses, potential medical costs, and more. You can learn more about how much you should save in this earlier article on the subject. In this article, we’re going to look specifically at how your needed retirement savings are calculated.

You might have used our retirement calculator to determine how much you’ll have per month in retirement (if not, we recommend it). But how does that calculator work? Let’s break down the different categories, and how they function together.

Current Income

This is your current individual annual income. Depending on where you are in your career, this number could fluctuate, so you may want to try adjusting it to see how it impacts your savings need. Just try to be realistic about your annual earnings, so you get the most accurate projection possible.  

Years to Retirement

Set this slider to the number of years you have left before your preferred retirement date. Note that of all of the categories in the retirement calculator, this one is the most flexible. If your ideal retirement date doesn’t produce your desired monthly income, you may need to delay retirement a couple years, or work with one of our advisors to change your investment strategy. 

Current Retirement Savings

This is the total amount, to date, that you have saved for retirement. This should include all sources of retirement savings, such as 401(k)s, IRAs and annuities.

Employer + Employee Contribution

This describes the total combined percentage of your retirement contribution, plus that of your employer. This percentage often changes throughout the course of our careers. As with salary, try to set a current or realistic future contribution.

Investment Style

You’ll commonly hear advisors discuss investment styles within three categories: conservative, moderate, or aggressive. The styles indicate the mix of investments you have (stocks, bonds or cash), determined by several factors including age, risk tolerance and years to retirement. A Trust Point advisor can help determine the best investment style for you.

Remember that our retirement calculator produces estimates only. It’s a good way to gauge our needs and develop an appropriate strategy for retirement saving, but it can’t predict every factor that will impact your post-work goals. To learn more about retirement planning, visit our Retirement Planning page and get in touch.

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Allyson Krause CRPP™, Managing Director Retirement Plan Services