Planning your financial future can be overwhelming. The right tools, including online calculators, can help you break it down to something manageable.
One of the points I made on a recent show about retirement is that it can seem overwhelming to look at your savings goals and see the end result. If you want to save $1 million, or $2 million, it can be difficult to know where to start — and how to translate that goal into actions you can take today.
This is where online calculators can be a great help. I recently discovered some helpful calculators from Regions Bank. These calculators can help you plan for your future — no matter your ultimate savings goals.
Save to Be a Millionaire
One of the most common financial future goals is to become a millionaire. Whether you are saving up with your retirement account, or making some other moves, it?s possible for you to determine what it takes to become a millionaire, and then adjust your current habits to match.
The most impressive thing about the ?Save to Be a Millionaire? calculator offered by Regions is that it also helps you adjust your savings for inflation. Many of us don?t stop to think that $1 million in today?s dollars is not going to have the same purchasing power as $1 million in the future. Inflation is going to reduce the effectiveness of your efforts.
With the millionaire calculator, you can enter your current age, your target age, and your current savings. This calculator also takes into account your marginal tax bracket, expected rate of return, and what you current save. The results show you whether you will reach your goal, and what it means for your purchasing power.
You can use these results to adjust your current behaviors. In my case, I experimented with adding more to my monthly savings in order to meet the spending power requirement. By adding another $250 to my savings effort, I can not only become a millionaire by the time I?m 65, but I will also have enough that I will have overcome inflation.
Being able to break it down like this provides me with actionable information that I can use right now to create a plan a prosperous financial future.
What Will My Savings Be Worth?
Another calculator that I find useful is one that takes a look at what you can expect from inflation going forward. This calculator factors in your taxable accounts and your tax-deferred accounts to help you create a plan that maximizes your gains according to taxes.
Currently, I?m a bit limited on my tax-deferred savings, since I use a Roth IRA for retirement. However, once my husband starts his new job, things are likely to change. In fact, we are going to see an ability to increase our tax-deferred savings, and I might change things up in the taxable savings account.
Even with the current situation, though, you can see that the tax-deferred savings really add up quickly. Even though my current monthly tax-deferred savings are only $100 more than the taxable savings, it?s clear that the difference over time, when you don?t have to use after-tax dollars, is a big one. This is a great illustration that can help you stick to retirement savings goals with your tax-deferred account. It?s a visual that can keep you motivated when you start questioning the wisdom of your actions.
Retirement Savings Calculator
Research indicates that less 50 percent of Americans have performed a retirement needs assessment. It?s impossible to make a plan if you haven?t figured out your needs. Using a good retirement savings calculator can help you get a realistic idea of what you will need in retirement.
The Regions Bank retirement calculator is a great resource for figuring your needs. In addition to inputting your current age and target retirement age, you also include the amount of income you expect to need in retirement, as a percentage of your current income (I selected 70 percent). There is also space to include your expected monthly Social Security and pension income during retirement. However, I think you?re better off leaving those items at $0, just so that they are gravy down the road, since you can?t really plan to have that income.
Next you can include assumptions about annual raises (I kept my at 0 percent), as well as inflation rate and expected rate of return, as well as life expectancy.
As you can see from my results, I am currently on track to meet my needs. If you find that you aren?t on track to meet your needs, you can make adjustments to the calculator fields to see what it would take to meet your needs, whether it?s assuming that you will need to downsize your lifestyle, or whether you should save more each month.
Your financial future depends on you taking the time now to plan ahead and assess your needs. If you want financial independence down the road, you need to plan now. The right online calculator tools can help you figure out just what you need to do today to secure your financial tomorrow.
Disclosure: This blog post was written for Regions Bank pursuant to a paid content arrangement I have with the company?s representatives. All views expressed are entirely my own, and were not influenced or directed by Regions Bank.