Financial planning is important for every stage of life, but if you want to retire with confidence, understanding your financial needs for the future is key. While retirement is considered the golden years, it also brings a fixed income, increased medical expenses, and everyday spending for necessities, hobbies, and travel.
You may be saving money through your 401(k), IRA, or employer-match program, but do you know if it’s enough to maintain your lifestyle in retirement and pay for other unexpected expenses along the way? Are you contributing too little? Are there areas you can reduce spending so you can afford to make additional contributions to your 401(k) plan? That’s where retirement calculators come in. Calculators can help you capture a good financial snapshot of where you are currently and what it’ll take to get where you need to be for retirement.
To use calculators effectively, you will need to do a little work first, including reviewing your current financial picture and determining goals for your future retirement. If you need help to determine and establish goals, consider reaching out to Slavic Wealth Management. Read on to learn how to get the most out of your 401(k) plan by using a retirement calculator to create financial projections.
Review Your Finances
Understanding your finances is important for financial planning. Start by reviewing your monthly income, including all sources such as job, freelance work, child support, etc. Once you know your total, review your expenses, accounting for necessary and discretionary spending, including housing, utilities, car payments, gas, dining out, vacation, shopping, and more.
If you’re not already using a budgeting platform, check out these five financial apps that will make tracking your finances easy and accessible. The apps will help you keep track of income, investments, and spending, and track your budgets to ensure you’re not overspending and under saving. If you’re not sure where to start, apply the 50/30/20 rule to your finances so you know where each dollar you make should be spent. Learn more about the rule here.
Define Retirement Goals
When using a 401(k) calculator, one of the things you’ll need to consider is the age you want to retire. This is important to the projection because age determines if you have financial flexibility or need to amplify savings efforts. For example, if you hope to retire at age 55 or 60, you will need to have more money saved earlier in life in order to maintain your lifestyle and keep up with expenses, but if you plan to work longer, then you may have some wiggle room when it comes to saving for the future.
Because of this, it’s important to determine your retirement goals early in life so you can pivot and make adjustments as your life changes. A retirement plan at age 25 looks a lot different from age 35, 45, and so on. As you change jobs, get married or divorced, have children, and other life changes, your income, spending, and goals will naturally change as well. That’s why using retirement calculators can help you project adjustments needed so you know where you stand financially today, tomorrow, and in retirement.
Calculate!
401(k) calculators take other factors into consideration as well, including current salary, estimated annual salary increases, current age, retirement age, contribution percentages, the annual rate of return, employer match, and more.
To get your curated report, visit Slavic401k.com. Once you plug in your numbers, you can view your report, which includes retirement projections. The report will show you how much your 401(k) is estimated to be worth at your retirement age, and note contributions needed to maintain a positive progression.
By reading through the scenarios in your report, you can determine where you may need to make adjustments to contributions, investments, retirement age, and more. Calculators are a great tool because they can help you understand your current position and future needs so you can ensure a secure, financially stable future.
To achieve your retirement goals, it’s important to reevaluate your financial snapshot often. Whether that means running new projections with a calculator, or, meeting with a financial advisor to discuss investment adjustments in your portfolio. Knowing your current snapshot can help you plan better for the future.
