Understanding Your Retirement Projection

This tool provides a simplified projection based on the inputs and assumptions you provide. It's designed to give you a general idea of your retirement preparedness.

Key Assumptions Made by This Calculator:

• Constant Rates: The calculator assumes that your investment returns (both pre- and post-retirement) and the inflation rate will remain constant throughout the respective periods. In reality, these rates fluctuate.
• Fixed Nominal Contributions: Annual contributions are assumed to be fixed nominal amounts and are not automatically adjusted for inflation or income growth, unless you manually account for this in your average annual contribution input.
• Annual Compounding/Calculation: For simplicity, calculations are generally performed on an annual basis. Interest on savings and contributions is compounded annually in the accumulation phase. Withdrawals and inflation adjustments are applied annually in the decumulation phase.
• End-of-Year Contributions/Withdrawals: Contributions are assumed to be made at the end of each year during the accumulation phase. Withdrawals are assumed to be taken at the beginning of each year during retirement.
• No Taxes Considered: This tool does not account for taxes on investment gains, contributions, or withdrawals, which can significantly impact your actual retirement income. Tax laws vary and can change.
• Life Expectancy as Fixed Duration: The "Planned Retirement Duration" is a fixed number of years. Longevity risk (living longer than expected) is a key concern in retirement planning.

Impact of Inflation:

Inflation erodes the purchasing power of money over time. Your "Desired Annual Withdrawal" is taken as today's value and is adjusted upwards by the assumed inflation rate each year to estimate your future living expenses. A higher inflation rate means you'll need more money each year to maintain the same standard of living.

Advanced Considerations / Factors Not Modeled:

• Sequence of Returns Risk: The order in which you experience good or bad investment returns, especially around retirement, can significantly impact how long your money lasts. This tool uses average returns.
• Variable Spending in Retirement: Real-life retirement spending is rarely constant. Healthcare costs may increase in later years, while travel might be higher in early retirement.
• Specific Investment Risks: The tool uses a general rate of return. The actual risk and return will depend on your specific investment choices.
• Healthcare & Long-Term Care Costs: These can be significant and unpredictable expenses in retirement not explicitly itemized here.
• One-time Large Expenses: Major purchases or emergencies are not factored in.

Recommendation: Use this tool as a starting point. It's crucial to regularly review and update your retirement plan as your circumstances, market conditions, and financial goals change. For comprehensive and personalized retirement planning, consider consulting with a qualified financial advisor.