Post-Retirement Assets/Savings
Post-Retirement Assets/Savings Worksheet Instructions
In this worksheet (Worksheet D in the printed booklet), we will take all of your anticipated assets and convert them to a monthly income that you can later use to compare with your anticipated monthly expenses in retirement. You can now add your Social Security and pension benefits. The estimated monthly income at retirement from Social Security or your fixed pension from work will be included in the calculations at the age(s) you entered in the first worksheet, which may or may not be later than retirement age.
First, fill in the box labeled Expected monthly Social Security benefits. You may be able to estimate your benefit by using the retirement estimator on the Social Security website at www.socialsecurity.gov.
If you have a fixed pension from work, the amount you enter in the worksheet is often based on your pay at the end of your career. Your employer, union, or the pension plan administrator can give you details about the amount and start date of your pension, and whether you will get your pension in a lump sum or fixed monthly checks (see discussion in Chapter 6 in the online version describing these options to help you choose). If you receive your benefit as a lump sum, put that amount in the box labeled Lump sum pension benefit. If you receive it as a fixed monthly benefit, fill in only the box labeled Fixed monthly pension benefit. Enter an assumed rate of return for any lump sum benefits: as before, the worksheet limits the rates to between 3 and 7 percent. The worksheet will use this interest rate to convert those assets at retirement into estimated income during retirement.
If you were in a traditional pension plan that was abandoned for some reason, like your employer going out of business, you will still receive some (or all) of your pension benefits since these plans are federally insured. Information about your plan and benefits may be available from the Pension Benefit Guaranty Corporation. (See Chapter 7 in the web version for PBGC contact information.)
Also keep in mind that while the worksheet includes your home equity, you may need to live in your home for some time or use some of the assets from its sale to purchase another home or pay for rent, so it may not provide immediate income.
The interactive worksheet will do some of the math for you in order to see how much money you might have by your first year of retirement. Keep in mind that the rates of return are being used to keep things simple. Investments can go up and go down and cannot be guaranteed.
The following examples demonstrate how your money can grow through compounding, as well as how your monthly income at retirement is calculated. Each example assumes that you are 10 years from retirement and selected a 5% annual rate of return on your investments.
- If you entered on the previous worksheet that you currently have $10,000 in a traditional IRA, that money will grow to be worth $16,290 at retirement. - If you start a new retirement savings account, and save $100 a month, those savings will be worth approximately $15,528 at retirement.
Finally, this worksheet converts your assets into estimated monthly income at retirement. For example, if you have $50,000 in a 401(k) account that will earn 5% each year for the next 10 years, the worksheet would calculate that you will have about $268 a month during a 30 year retirement.
The calculation takes into account the continued growth of your assets while you are withdrawing money to live on. Remember, this calculation is a guesstimate, since things that impact your income, such as your tax status, life expectancy, etc. will vary.
