A Retirement Planning Calculator Can Help You To Retire With Money

You need to get yourself a good retirement planning calculator, if you're among the many retirees taking care of their own self directed financial accounts. But even if you are younger and just beginning to work, it's a good idea to start planning for your future retirement. How much cash will you have on which to retire if you continue to save and invest at your present-day rate? This is what a good retirement planning calculator will help you to calculate.

Very few things are certain in life. Not your current salary. Not your current rate of return on your investments. Not your good health. All of these things are variables that can change in an instant. Nevertheless, the purpose of creating a retirement plan for yourself is to help to give yourself the best odds of being able to live the good life when you retire. A retirement calculator will help you to do this, but you need a few prerequisites to get started.

What is your current age and at what age do you plan to retire? The greater the distance between these two figures, the more flexibility you have in your options and the greater the chances are that you will be successful. If you are age 60 and plan to retire at age 65, a retirement calculator will not help you much. It can tell you what your income will be when you retire, but beyond that, it won't be of much use. On the other hand, if you are 30 years old and plan to retire at age 65, a retirement calculator can help you plenty. It can tell you what interest rates you need to meet your desired income targets. It can tell you whether you can reach your goals with conservative investments or if you need to take a chance on riskier investments that will compound at higher interest rates. A good retirement calculator will also let you experiment with how different retirement dates will impact your income. You may discover that you can retire much sooner than you thought you would.

What's the least amount of cash you require when you retire? This is not the same question as how much cash you would like to have. The minimum amount calculation considers the cost of basic human needs and services such as - shelter, food, health care, and so on. A good retirement calculator will take a look at your current outlay for these items and extrapolate their costs into the future, taking into account inflation and other cost of living variables such as age. You may discover that what you thought was needed to maintain your current standard of living will be, in fact, sadly deficient 35 years from now. Knowing this is invaluable and will let you adjust your savings plan in time to make a difference.

When you retire, how much of your money can you safely withdraw from your investments without radically affecting your principal? The principal is your retirement lifeblood. If it vanishes, so does your monthly income. The best calculators will let you adjust the principal amounts and desired monthly income amounts until you are satisfied that the regular amounts you withdraw, will last you for the rest of your life.

Anyone, who is not retired, ought to punch these retirement variables into a calculator at a minimum of once a year to make sure that their retirement plan is still on track. You don't want to discover any bad financial surprises when you are finally ready to retire. As a matter of fact, even if you are retired, it's always a good idea to periodically take stock of and reassess your financial condition.

What Is An Minimum Required Distribution?

In an article written by Martha Hamilton for the AARP Bulletin, she addresses the current economic crisis and why a Minimum Required Distribution will affect individuals 70 years and older.

According to her article, "Current tax rules require investors to begin withdrawing certain minimum amounts annually from their Individual Retirement Accounts and 401(k) plans when they reach age 70 1/2."

There is a problem, however.  Due to the financial crisis, a market downturn resulted in a decrease in the value of 401Ks and other retirement accounts to the tune of 42%.

Thus, the MRD law came into play.  As stated by Ms. Hamilton, "The reason behind the MRD law is that it allows the IRS to collect taxes that were deferred when the money was put into savings.  But thanks to the decline in the market, older Americans will have to take withdrawals that were calculated based on last year's higher values. 

For example, a 75-year-old who has to withdraw $4,366.81 from an Individual Retirement Account that was worth $100,000 on Dec. 31, 2008, now has to take that same amount from an account possibly worth only $60,000 or face a high tax penalty."

If you are one of the millions of Baby Boomers facing this scenario, there may be help on the way.Right now, Congress and the Treasury are trying to put a halt to minimum required distributions.Congress needs to act fast because the law says you have to make the withdrawals by 12/31.

Over two trillion dollars have been lost due to the current financial crisis it is estimated.  Individuals who have retirement savings are in jeopardy of losing even more of their hard-earned money. This is bad for saving for retirement.

Currently, there is a proposal to include in the second Stimulus Package a ten-point plan devised by the American Benefits Council.  One of the major points included in this proposal is:

"To allow retirees a chance to keep their retirement accounts whole while catching the market on the upswing by temporarily suspending minimum required distribution rules."

It will be up to Congress to pass this legislation in the next few weeks, after President-Elect Obama is in office.

Learn More About Retirement Income Investment

Retirement Income Investing

For any individual one of the most important milestones in their lives is retirement. It is a period in our life when we will look forward to living on our own schedule and doing things that we've always wanted to do while not having to go to work as much as we used to or not even work at all.

Enjoying the benefits of retirement, however depends on a variety of factors and some of them quite critical. Of these factors, one of the critical ones is ensure that you have done the proper planning in advance and have arranged your finances properly so that you will continue to enjoy life during retirement.

In addition, it is important to make sure that one's money still works even though an individual has stopped working. Therefore, it is important to understand some of the retirement income investment options available that a retiree can utilize to make sure that their money keeps pace with their needs and inflation.

There are two types of relatively modest investment options that will particularly address this issue and accomplish this goal. The money markets and certificate of deposits are among those included in these options.

What Are Certificates Of Deposit?

One of the retirement income investment options that an individual has to ensure that their money that is received from retirement sources continues to work for them is by investing in certificates of deposit. Basically, a certificate of deposit is an option provided by various financial institutions.

These certificates of deposit or CDs are purchased by the investor and for the dollars invested are given a set interest rate when the CD's have matured.  Often these CD's can mature in increments of three, six, nine, 12, two and five year increments.  As long as the investor does not ask for their investment prematurely they are guaranteed the full interest return on the amount of money that they have invested in a certificate of deposit.  In addition, the longer period of time that the money is committed to the investment the greater the return on that investment.

The downside to purchasing certificates of deposit is that the money must be kept with a financial institution over the agreed period of time.  If the investor draws out their money earlier than the time agreed upon there may be an incurred penalty.

The Money Markets

Another option that an individual may have that provides a little bit more flexibility in accessing one’s retirement income investment is through a vehicle known as a money market. The money market is like the checking account in which money can be spent utilizing a check or using a debit card.  However, there are restrictions in regards to the number of times these types of transactions can be accomplished.  In addition, in order to open up a money market, often financial institutions require a minimum amount of money that it takes to open a money market.

This type of investment as a form of retirement income investment has a positive component about it and this is that the interest rate at which your money invested is much higher than that of a regular savings account.