- Existing life insurance coverage
- Total amount of life insurance coverage you currently have for yourself.
- Years for insurance income to last
- Number of years your spouse will need to use your insurance proceeds to provide for living expenses and income.
- Expected inflation rate
- This is the rate that you expect your expenses and income to rise. Your total expenses and earned income are increased by this rate for each year you require income.
- After-tax return on investments
- The annual percentage rate you expect to earn on your savings. This includes any insurance proceeds and your educational savings. You may wish to use a more conservative rate of return if you will need to begin using your insurance proceeds immediately. The actual rate of return is largely dependent on the types of investments you select. The Standard & Poor's 500® (S&P 500®) for the 10 years ending December 31st 2023, had an annual compounded rate of return of 15.2%, including reinvestment of dividends. From January 1, 1970 to December 31st 2023, the average annual compounded rate of return for the S&P 500®, including reinvestment of dividends, was approximately 10.9% (source: www.spglobal.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 financial institution 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 investment funds and/or investment companies may charge. This calculator compounds all growth annually. For the purposes of this calculator taxation is not factored into the results. If you pay taxes on the interest, dividends or capital gains you should enter your after-tax rate of return.
Insurance products may additionally include mortality, expense risk charges, cost of insurance, administrative, and surrender charges that will have a significant impact on the total rate of return for the investment.
- Required estate preservation
- This is the amount that you wish to have remaining at your death. For example, you may wish to preserve part of your life savings as an inheritance for your children or to donate to charity.
- Retirement accounts
- The current total balance of your retirement accounts. This would include IRAs, 401(k)s, annuities and any other retirement savings you may have.
- Bonds
- If you own any Treasury, municipal, or commercial bonds enter the total here.
- Stocks
- If you own any individual stocks, enter the total here. Again, do not include any stocks that are held in a registered retirement account.
- Mutual funds
- If you own any mutual funds, enter the total here. Do not include any mutual funds that are in your registered retirement accounts, they were already included in the 'Registered retirement accounts' line.
- Savings bonds
- If you own any Savings Bonds enter the total here.
- Checking and savings
- The current total balance of your checking and savings accounts.
- Other investment assets
- If you have any other investment assets of value, you can enter the total here.
- Home
- Current value of your home. This should be as close as possible to the actual market value of your home. If you have owned your home for a number of years, the current market value could be significantly higher than your original purchase price.
- Other real-estate
- The value of any other real-estate you may own. Include second homes, undeveloped land, rental property or any commercial buildings you may have an interest in. As with your home, use the actual market value of this real-estate.
- Automobiles
- This is the total value of all automobiles that you own. Do not include any leased vehicles.
- Other vehicles
- If you own any other vehicles, such as RVs, campers or collectibles, enter them here.
- Jewelry
- The value of any jewelry, gems or precious metals such as gold. If you have owned these items for a number of years they may have appreciated in price, remember to use the current market value.
- Other personal property
- The value of other assets. This might include items such as furniture, home electronics, silverware, etc.
- Home mortgage
- This is the current principal balance remaining on your mortgage. This is the amount that you would have to pay to own your home free and clear.
- Other mortgage
- This is the current principal balance for any other real-estate mortgages you may have. This includes mortgages on rental property, undeveloped land, commercial property or any other real-estate.
- Auto loans
- Total amount you currently have outstanding on your auto loans.
- Student loans
- Total amount, if any, that you currently owe in student loans. You should enter the total outstanding even if these loans are currently in deferment.
- Credit card debt
- Your total credit card debt.
- Other loans
- Total amount, if any, of any other loans you may have.
- Taxes on assets
- Estate taxes are required to be paid upon your death.
- Probate costs
- Probate costs cover legal fees for disbursing the assets of the deceased. You may incur significant probate costs even if you have a will.
- Funeral costs
- All costs required to cover the cost of the funeral.
- Other expenses
- Any other expenses you might have that would need to be paid if you or your spouse died.
- Current age of children
- Current age of your children. This calculator is based on each child beginning their college education at age 18. The difference between their current age and 18 is the number of years you have to save.
- Annual tuition and books
- Current estimated cost of one year of tuition and books. This amount should be per child and be specific to the school they may be interested in attending. For the purposes of this calculator all expenses are assumed to be due at the end of the year.
- Room and board
- Current estimated cost of one year living expenses. Like tuition and books, this amount should be per child and specific to the school they may be interested in attending. For the purposes of this calculator all expenses are assumed to be due at the end of the year.
- Surviving spouse's income
- Enter net monthly income that your spouse will receive from each source. The start year is the year the income begins, the end year is when the income source will end.
- Monthly living expenses
- This is the total of all of your monthly expenses. This includes your expenses for housing, insurance, loan payments, utilities, and other miscellaneous items.
