How To Calculate Retirement Income

By: LeRoy Coffie

Break Studios Contributing Writer

You want to know how to calculate your retirement income? When you retire, you need money to pay your bills and live a decent life. You need to calculate your retirement income before you retire to prepare you for your future retirement. You can easily calculate your retirement income.

You will need:

Pen or pencil
Notebook
Calculator
Financial statements
Ideas about how you want to live when you retire

Figure out how much money you will need to retire comfortably. This will vary. People are different, as so are an individual's needs and wants. You will need at least 60 percent of your current income to retire comfortably. When you are old enough to retire, your house should be free and clear—of a mortgage and dependents who may be hesitant to launch.
Decide where you will live when you retire. Keeping your house will cost more than selling it and using the proceeds to earn income for your retirement. Are you and your spouse healthy? Do either one of you need any special care? How much will health care cost you? It is better for an older couple to live in a condo or apartment than a house. There is so much extra work and money needed to continue to live in your house.
Take inflation in to account when you calculate your retirement income. Everything costs more as the years go by. Inflation grows at a three percent rate (yearly) on average. This means you will need three percent more money each year. As you grow older, your health cost will increase. It is possible you will have to consider living in a retirement home if your health fades. You have to prepare yourself financially for this possibility.
Life insurance becomes important, as you grow older. Buy the life insurance now. Calculate what it will cost you and your spouse to pay for life insurance, as you grow older. If one of you dies, the life insurance may help you pay for hospital bills and burial.
Decide what you want to do when you get older. Will you travel? Will you live in an expensive city or a cheaper place? These decisions will be important in calculating your retirement income.
Look through your IRAs and pensions, and do not calculate your Social Security benefits. Do not count on something you are not entirely sure will be there when you retire. Calculate all your assets and weigh them against your bills. Pay off all your debts before you retire.
Decide what age you want to retire. It will cost you more if you decide to retire early. Calculate this into your retirement plans.
Make a retirement income that will outlast your lifetime. Calculate and see if you have built up enough income to live off the interest. Find an account (that is safe) and pays you the most income. Prepare this before you decide to retire. Preparation can help you succeed when you calculate your retirement income. Calculate your net worth and decide if your net worth is enough for you to live on when you retire.
Finally, decide if you will have to work through your retirement. Calculate your future work income when you calculate your retirement income. The longer you are able to work, the less money you will need to retire.