- Current age
- Your current age.
- Years to contribute
- This is the number of years you will be adding new money to your investment savings. If you wish to start withdrawals immediately, enter 0 for the years to contribute.
- Starting balance
- Total amount that you currently have invested. Include any sources of investment savings such as 401(k)s, IRAs and Annuities that you wish to include in this analysis.
- Amount to contribute
- This is the amount that you will add to your investment savings. You can add additional amounts weekly, monthly, quarterly or annually. All contributions are assumed to be made at the beginning of each period.
- Annual return
- This is the annual rate of return you expect from your investments after taxes. When withdrawing, the return earned is often assumed to be lower due to more conservative investment choices to help insure a steady flow of income. 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.
- Inflation rate
- This is what you expect for the average long-term inflation rate. A common measure of inflation in the U.S. is the Consumer Price Index (CPI). From 1925 through 2023 the CPI has a long-term average of 3.0% annually. Over the last 40 years the highest CPI recorded was 13.5% in 1980. For 2023, the last full year available, the CPI was 3.1% annually as reported by the U.S. Bureau of Labor Statistics.
- Contribution frequency
- The frequency that contributions are made to this account. Options include weekly, every other week, twice monthly, monthly, quarterly, semi-annual and annually.
- Inflation adjustments and your contributions
- To keep your periodic contributions at the same level choose the option 'No adjustment for inflation'. If you select 'Adjust contributions annually for inflation' the calculator will increase your periodic contribution at the end of each year by the rate of inflation.
- Calculate
- Select the type of calculation you wish to use. You can calculate either the maximum withdrawal for a period of time, or how long a specific withdrawal amount will last.
- Withdrawal beginning balance
- Balance of your account at the beginning of your withdrawal period. This is the total you will have accumulated immediately before distributions begin.
- Withdrawals to last
- This is the number of years that your withdrawals are to last. If you choose the option to 'Calculate time balance will last' this field will be calculated.
- Amount to withdraw
- This is the amount that you expect to be withdrawing from your investment savings. You can make withdrawals weekly, monthly, quarterly or annually. All withdrawals are assumed to be taken at the beginning of each period. If you choose the option to 'Calculate maximum withdrawal' this field will be calculated.
- Inflation adjustments and your withdrawals
- These selections allow you to adjust your withdrawals for inflation. If you choose 'No adjustment for inflation' your withdrawal will remain at a constant amount for the entire duration of your withdrawals. 'Inflation adjustments begin with withdrawals' will increase your withdrawal amount at the end of each year by the rate of inflation. This begins at end of the first year of withdrawals. 'Inflation adjustments begin immediately' will increase the withdrawal amount, that was entered or calculated, by the rate of inflation beginning immediately. Choosing this option helps illustrate the cost of providing a current amount of purchasing power throughout your withdrawals.
- Withdrawal frequency
- The frequency that withdrawals are made from this account. Options include weekly, every other week, twice monthly, monthly, quarterly, semi-annual and annually.
