Trying to calculate the amount of cash savings and other assets you’re going to need in place so that you can enjoy your upcoming retirement? You’re not alone. There are loads of financial planners’ advice columns available to learn from. Each of them have their own specific recommendations, but there’s something you should know: Nobody can tell you “the best” way to calculate your retirement amount. It’s not possible! Here’s why

How much do I need to retire comfortably?

You can plug your information into any online retirement fund calculator, and get many accurate, precise monetary amounts spat back at you. That’s all good – but basically worthless. You see, when you plug in those variables into those calculators, YOU are guessing at future contribution amounts. You are dictating the age when you want to retire. You are guessing the amounts you’re going to faithfully contribute. And you are assuming nothing catastrophic happens in your world, or in the financial markets realm. That’s a lot of guessing to come up with such specific numbers. Don’t you think?

Calculate Retirement Amount: Simple Example

Assume that you are 45 now, and that you would like to retire at age 65. That means you have 20 years to save and invest. You “guess” that you will live to be 80 years old, meaning you will need enough in your retirement fund to last you 15 years (80 – 65). You “choose” that you will need $30,000 annually to maintain your “chosen” lifestyle. $30,000 x 15 (years) = $450,000. Now, at 45 years old, you have 20 years to accumulate $450,000 in your retirement fund. That’s $22,500 per year. Simple mathematics, right?

But wait a minute: that’s almost all choosing and guessing! If you can foresee the future, and know that you definitely going to meet all your retirement fund investment goals, then you’re completely amazing! Most people simply can’t do it. Here’s why:

•  You have no knowledge of or control over financial markets conditions.
• Stock markets crash
• Currency rates fluctuate.
• The Prime Rate can change at any moment.
• The amount you choose that you will need annually may have a completely different real value at your chosen retirement age.
• You may or may not be able to make your intended contributions.

Getting the picture now?

The truth about calculating your necessary retirement amount?

Even if you are an incredibly detailed, strategic, determined and consistent person, there will be events and happenings that will occur – things you will not be able to control. It certainly doesn’t hurt a thing to use a retirement planning calculator. Go ahead: plug in some variables. Experiment with different input amounts. It’s sort of fun – and it gives you a somewhat solid basis to plan your retirement on. You just have to remember that life will happen.

Sometimes you will probably fall short of making your contributions. Other times, maybe you will exceed your intentions. In the end, as long as you’re actively planning and making the contributions you can, you’re going to be just fine. Relax and enjoy…