Edward Jones Retirement Planner
Use this calculator to estimate if your current retirement savings and contributions are on track to meet your desired income goals. This tool helps you visualize the power of compounding and the impact of your financial decisions over time, similar to the long-term planning approach advocated by Edward Jones.
Understanding Your Retirement Journey with Edward Jones Principles
Planning for retirement is one of the most significant financial goals you'll undertake. At Edward Jones, the emphasis is often on a personalized, long-term approach, understanding your unique situation, and setting clear objectives. This calculator aims to provide a similar framework, helping you project your future financial standing based on your current savings, contributions, and expected growth.
How This Calculator Works
This tool takes several key factors into account to project your potential retirement savings and how much income those savings might generate. Here's a breakdown of the inputs:
- Your Current Age: Your starting point. The younger you are, the more time your money has to grow through compounding.
- Desired Retirement Age: When you plan to stop working. This determines your investment horizon.
- Current Retirement Savings: The total amount you've already accumulated in retirement accounts (e.g., 401(k), IRA).
- Annual Retirement Contribution: How much you plan to save each year. Consistent contributions are crucial for building wealth.
- Expected Annual Investment Return (%): The average annual growth rate you anticipate your investments will achieve. This is a critical assumption; higher returns accelerate growth, but also come with higher risk. A common historical average for a diversified portfolio might be 6-8%.
- Desired Annual Retirement Income (Today's $): How much income you'd like to have each year in retirement, expressed in today's purchasing power. This helps set your target.
- Expected Annual Inflation Rate (%): The rate at which prices are expected to rise. Inflation erodes purchasing power, so it's vital to account for it to ensure your future income can still cover your expenses.
- Years Expected in Retirement: How long you anticipate needing your retirement funds to last. This impacts how much income your nest egg can sustainably provide.
The Calculation Process
The calculator performs several steps:
- It first determines the number of years until your retirement.
- It then projects the future value of your current savings, considering your expected investment return over those years. This is the power of compounding.
- Next, it calculates the future value of your annual contributions, treating them as an annuity that grows over your working years.
- These two amounts are added together to give you your Total Projected Savings at Retirement.
- Simultaneously, it adjusts your Desired Annual Retirement Income for inflation, showing you how much income you'll need in future dollars to maintain today's purchasing power.
- Finally, it estimates how much annual income your total projected savings could sustainably provide throughout your expected retirement years, comparing it to your inflation-adjusted desired income.
Interpreting Your Results
The results will show you:
- Total Projected Savings at Retirement: The estimated lump sum you'll have when you retire.
- Desired Annual Income (Inflation-Adjusted): What your desired income in today's dollars will actually be worth in future dollars due to inflation.
- Projected Annual Income from Savings: How much annual income your projected savings can realistically generate for your expected retirement duration.
- Gap/Surplus: The difference between your projected income and your desired income. A positive number means you're on track or ahead; a negative number indicates a potential shortfall.
What if There's a Shortfall?
If your projected income falls short of your desired income, don't despair! This calculator is a planning tool. Here are strategies often discussed in financial planning:
- Increase Annual Contributions: Even small, consistent increases can make a big difference over time.
- Delay Retirement: Working a few extra years allows more time for savings to grow and reduces the number of years you'll need to draw from your nest egg.
- Adjust Investment Strategy: With guidance from a financial advisor, you might explore options to potentially increase your expected annual return (while understanding associated risks).
- Reduce Desired Retirement Income: Re-evaluate your retirement lifestyle expectations.
- Consider a Combination: Often, a mix of these strategies is the most effective.
Example Scenario:
Let's say a 35-year-old has $50,000 saved, contributes $10,000 annually, expects a 7% return, wants $60,000/year in retirement (at age 65), with 3% inflation, and expects to live 25 years in retirement.
After calculation, they might find:
- Years to Retirement: 30 years
- Total Projected Savings at Retirement: Approximately $1,400,000
- Desired Annual Income (Inflation-Adjusted): Approximately $145,000 (what $60,000 today will feel like in 30 years)
- Projected Annual Income from Savings: Approximately $98,000
- Gap: A shortfall of about $47,000 per year.
This example highlights the importance of inflation and the need to save aggressively to meet future income needs. A financial advisor can help you bridge such gaps with a tailored plan.
Remember, this calculator provides estimates. For personalized advice and a comprehensive retirement plan, consulting with a qualified financial advisor is always recommended.
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function calculateRetirement() {
var currentAge = parseFloat(document.getElementById("currentAge").value);
var retirementAge = parseFloat(document.getElementById("retirementAge").value);
var currentSavings = parseFloat(document.getElementById("currentSavings").value);
var annualContribution = parseFloat(document.getElementById("annualContribution").value);
var annualReturnRate = parseFloat(document.getElementById("annualReturnRate").value) / 100;
var desiredAnnualIncome = parseFloat(document.getElementById("desiredAnnualIncome").value);
var inflationRate = parseFloat(document.getElementById("inflationRate").value) / 100;
var retirementLifeExpectancy = parseFloat(document.getElementById("retirementLifeExpectancy").value);
var resultDiv = document.getElementById("retirementResult");
resultDiv.innerHTML = ""; // Clear previous results
// Input validation
if (isNaN(currentAge) || isNaN(retirementAge) || isNaN(currentSavings) || isNaN(annualContribution) ||
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var yearsToRetirement = retirementAge – currentAge;
// 1. Future Value of Current Savings
var fvCurrentSavings = currentSavings * Math.pow((1 + annualReturnRate), yearsToRetirement);
// 2. Future Value of Annual Contributions (Future Value of an Ordinary Annuity)
var fvAnnualContributions = 0;
if (annualReturnRate === 0) {
fvAnnualContributions = annualContribution * yearsToRetirement;
} else {
fvAnnualContributions = annualContribution * ((Math.pow((1 + annualReturnRate), yearsToRetirement) – 1) / annualReturnRate);
}
// 3. Total Projected Savings at Retirement
var totalProjectedSavings = fvCurrentSavings + fvAnnualContributions;
// 4. Desired Annual Income adjusted for inflation
var desiredAnnualIncomeFuture = desiredAnnualIncome * Math.pow((1 + inflationRate), yearsToRetirement);
// 5. How much annual income can the total projected savings support?
// This is the payment (PMT) of an annuity, where PV = totalProjectedSavings
var projectedAnnualIncome = 0;
if (annualReturnRate === 0) {
projectedAnnualIncome = totalProjectedSavings / retirementLifeExpectancy;
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// Formula for annuity payment (withdrawal) from a lump sum (PV)
// PMT = PV * [r / (1 – (1 + r)^-n)]
projectedAnnualIncome = totalProjectedSavings * (annualReturnRate / (1 – Math.pow((1 + annualReturnRate), -retirementLifeExpectancy)));
}
var gapOrSurplus = projectedAnnualIncome – desiredAnnualIncomeFuture;
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Your Retirement Projection:
";
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Years Until Retirement: " + yearsToRetirement + " years";
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Projected Total Savings at Retirement: $" + totalProjectedSavings.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}) + "";
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Desired Annual Income (Inflation-Adjusted): $" + desiredAnnualIncomeFuture.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}) + "";
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Projected Annual Income from Savings: $" + projectedAnnualIncome.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}) + "";
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Status: You are projected to have a
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Status: You are projected to have a
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