Planning Your Retirement Income
Retirement planning involves two distinct phases: accumulation (saving and growing your money) and distribution (withdrawing money to live on). This calculator helps you model both phases to create a comprehensive picture of your financial future.
Key Terms Explained
- Nest Egg: The total value of your investments at the moment you retire.
- Withdrawal Strategy: How you plan to take money out. A common guideline is the "4% rule," which suggests withdrawing 4% of your initial nest egg each year, adjusted for inflation.
- Inflation: The rate at which the cost of living increases. Your retirement income needs to keep pace with inflation to maintain your purchasing power.
How to Interpret the Results
The "Longevity" result is crucial. It tells you if your planned withdrawals are sustainable. The drawdown chart and table visualize how your balance is projected to change over time, factoring in both investment returns and your withdrawals. Use this information to adjust your savings, retirement age, or withdrawal plans to meet your goals.