Rowe Price Retirement Calculator

T. Rowe Price Retirement Planner

Use this calculator to estimate if your current savings and contributions are on track to meet your desired retirement income goals. It considers your current age, planned retirement age, existing savings, ongoing contributions, expected investment returns, and the impact of inflation.

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 desiredIncome = parseFloat(document.getElementById("desiredIncome").value); var preRetirementReturn = parseFloat(document.getElementById("preRetirementReturn").value) / 100; var postRetirementReturn = parseFloat(document.getElementById("postRetirementReturn").value) / 100; var inflationRate = parseFloat(document.getElementById("inflationRate").value) / 100; var resultDiv = document.getElementById("retirementResult"); resultDiv.innerHTML = ""; // Clear previous results // Input validation if (isNaN(currentAge) || isNaN(retirementAge) || isNaN(currentSavings) || isNaN(annualContribution) || isNaN(desiredIncome) || isNaN(preRetirementReturn) || isNaN(postRetirementReturn) || isNaN(inflationRate) || currentAge <= 0 || retirementAge <= 0 || currentSavings < 0 || annualContribution < 0 || desiredIncome < 0) { resultDiv.innerHTML = "Please enter valid positive numbers for all fields."; return; } if (retirementAge <= currentAge) { resultDiv.innerHTML = "Desired Retirement Age must be greater than your Current Age."; return; } var yearsToRetirement = retirementAge – currentAge; var yearsInRetirement = 30; // Common assumption for retirement duration // 1. Future Value of Current Savings var fvCurrentSavings = currentSavings * Math.pow(1 + preRetirementReturn, yearsToRetirement); // 2. Future Value of Annual Contributions (Future Value of Ordinary Annuity) var fvAnnualContributions; if (preRetirementReturn === 0) { fvAnnualContributions = annualContribution * yearsToRetirement; } else { fvAnnualContributions = annualContribution * ((Math.pow(1 + preRetirementReturn, yearsToRetirement) – 1) / preRetirementReturn); } // 3. Total Projected Nest Egg at Retirement var projectedNestEgg = fvCurrentSavings + fvAnnualContributions; // 4. Inflation-Adjusted Desired Income at Retirement var adjustedDesiredIncome = desiredIncome * Math.pow(1 + inflationRate, yearsToRetirement); // 5. Required Nest Egg to Generate Desired Income (Present Value of Annuity) var requiredNestEgg; if (postRetirementReturn === 0) { requiredNestEgg = adjustedDesiredIncome * yearsInRetirement; } else { requiredNestEgg = adjustedDesiredIncome * (1 – Math.pow(1 + postRetirementReturn, -yearsInRetirement)) / postRetirementReturn; } // 6. Retirement Gap/Surplus var gapSurplus = projectedNestEgg – requiredNestEgg; // 7. Estimated Annual Income from Projected Nest Egg (PMT of Annuity) var estimatedAnnualIncome; if (postRetirementReturn === 0) { estimatedAnnualIncome = projectedNestEgg / yearsInRetirement; } else { estimatedAnnualIncome = projectedNestEgg * postRetirementReturn / (1 – Math.pow(1 + postRetirementReturn, -yearsInRetirement)); } // Display Results var resultsHtml = "

Your Retirement Plan Summary:

"; resultsHtml += "Years Until Retirement: " + yearsToRetirement + ""; resultsHtml += "Projected Nest Egg at Retirement: $" + projectedNestEgg.toLocaleString(undefined, { minimumFractionDigits: 2, maximumFractionDigits: 2 }) + ""; resultsHtml += "Desired Annual Retirement Income (Adjusted for Inflation): $" + adjustedDesiredIncome.toLocaleString(undefined, { minimumFractionDigits: 2, maximumFractionDigits: 2 }) + ""; resultsHtml += "Required Nest Egg to Fund Desired Income: $" + requiredNestEgg.toLocaleString(undefined, { minimumFractionDigits: 2, maximumFractionDigits: 2 }) + ""; resultsHtml += "Estimated Annual Income from Projected Nest Egg: $" + estimatedAnnualIncome.toLocaleString(undefined, { minimumFractionDigits: 2, maximumFractionDigits: 2 }) + ""; if (gapSurplus >= 0) { resultsHtml += "You are projected to have a surplus of $" + gapSurplus.toLocaleString(undefined, { minimumFractionDigits: 2, maximumFractionDigits: 2 }) + " at retirement."; } else { resultsHtml += "You are projected to have a shortfall of $" + Math.abs(gapSurplus).toLocaleString(undefined, { minimumFractionDigits: 2, maximumFractionDigits: 2 }) + " at retirement."; // Calculate additional annual savings needed to close the gap var additionalSavingsNeeded; var futureValueGap = Math.abs(gapSurplus); if (preRetirementReturn === 0) { additionalSavingsNeeded = futureValueGap / yearsToRetirement; } else { additionalSavingsNeeded = futureValueGap * preRetirementReturn / (Math.pow(1 + preRetirementReturn, yearsToRetirement) – 1); } resultsHtml += "To close this gap, you would need to save an additional $" + additionalSavingsNeeded.toLocaleString(undefined, { minimumFractionDigits: 2, maximumFractionDigits: 2 }) + " per year."; } resultDiv.innerHTML = resultsHtml; }

Understanding Your Retirement Future with the T. Rowe Price Retirement Planner

Planning for retirement is one of the most critical financial goals for individuals. The T. Rowe Price Retirement Planner, inspired by comprehensive retirement planning principles, helps you visualize your financial future and assess if you're on track to achieve your desired lifestyle in retirement. This tool is designed to provide a clear estimate of your potential nest egg and the income it could generate, helping you make informed decisions today.

Why Retirement Planning Matters

Retirement isn't just about stopping work; it's about having the financial freedom to live the life you envision. Without proper planning, you might face a significant gap between your desired retirement income and what your savings can actually provide. Factors like increasing life expectancy, rising healthcare costs, and inflation make proactive planning indispensable.

Key Factors in Your Retirement Calculation

Our calculator takes several crucial elements into account to give you a realistic projection:

• Your Current Age: The younger you start, the more time your money has to grow, thanks to the power of compounding.
• Desired Retirement Age: This determines your accumulation period and the length of your retirement.
• Current Retirement Savings: Your existing nest egg forms the foundation of your future wealth.
• Annual Retirement Contribution: Regular contributions significantly boost your savings over time. Even small, consistent amounts can make a big difference.
• Desired Annual Retirement Income (in today's dollars): This is your target income, expressed in current purchasing power. The calculator will adjust this for inflation to estimate what you'll need in future dollars.
• Expected Annual Investment Return (Before Retirement): The growth rate of your investments during your working years. Higher returns can accelerate your savings, but also come with higher risk.
• Expected Annual Investment Return (During Retirement): The rate at which your remaining nest egg continues to grow while you're drawing income from it.
• Expected Annual Inflation Rate: Inflation erodes purchasing power. This rate is crucial for adjusting your desired income to future values, ensuring your money can still buy what you need.

How the Calculator Works

The T. Rowe Price Retirement Planner performs several key calculations:

1. Projects Your Nest Egg: It calculates the future value of your current savings and your ongoing annual contributions, considering your expected investment returns until retirement.
2. Adjusts for Inflation: Your desired annual retirement income is adjusted for inflation to reflect its equivalent purchasing power at your retirement age.
3. Determines Required Nest Egg: Based on your inflation-adjusted desired income and your expected investment returns during retirement, it estimates the total capital you'll need to sustain that income for a typical retirement duration (e.g., 30 years).
4. Calculates Gap or Surplus: It compares your projected nest egg with the required nest egg to show if you're on track, have a surplus, or face a shortfall. If there's a shortfall, it also estimates the additional annual savings needed to bridge that gap.
5. Estimates Income from Projected Savings: It also shows you the annual income your projected nest egg could realistically provide during retirement.

Interpreting Your Results

• Projected Nest Egg: This is the total amount you're estimated to have saved by your retirement age.
• Desired Annual Retirement Income (Adjusted for Inflation): This is the real dollar amount you'll need each year in retirement to maintain your desired lifestyle, accounting for future price increases.
• Required Nest Egg: This is the ideal amount you should have saved to comfortably generate your inflation-adjusted desired income throughout retirement.
• Estimated Annual Income from Projected Nest Egg: This shows what your projected savings can actually provide you annually in retirement.
• Gap/Surplus: A positive number indicates you're ahead of schedule; a negative number means you need to save more or adjust your expectations. The calculator will also suggest how much more you might need to save annually to close any gap.

Realistic Examples

Let's consider a few scenarios:

• Scenario 1: Early Start, Consistent Saving
  Current Age: 30, Retirement Age: 65, Current Savings: $50,000, Annual Contribution: $12,000, Desired Income: $70,000, Pre-Retirement Return: 8%, Post-Retirement Return: 6%, Inflation: 3%.
  Result: A significant projected nest egg, likely leading to a surplus, demonstrating the power of early and consistent saving.
• Scenario 2: Mid-Career Catch-Up
  Current Age: 45, Retirement Age: 65, Current Savings: $150,000, Annual Contribution: $8,000, Desired Income: $50,000, Pre-Retirement Return: 7%, Post-Retirement Return: 5%, Inflation: 3%.
  Result: Might show a smaller surplus or a slight shortfall, indicating the need to increase contributions or adjust desired income.
• Scenario 3: Nearing Retirement, Modest Savings
  Current Age: 55, Retirement Age: 65, Current Savings: $200,000, Annual Contribution: $5,000, Desired Income: $40,000, Pre-Retirement Return: 6%, Post-Retirement Return: 4%, Inflation: 3%.
  Result: Likely a shortfall, highlighting the urgency to maximize contributions, consider working longer, or reduce desired retirement spending.

Important Considerations

This calculator provides estimates based on the inputs you provide. Actual investment returns can vary significantly, and inflation rates are subject to change. It's crucial to:

• Review Regularly: Revisit your retirement plan annually or whenever significant life events occur (e.g., marriage, new job, birth of a child).
• Diversify Investments: A well-diversified portfolio can help manage risk and potentially enhance returns.
• Consider Professional Advice: For personalized guidance, consult with a qualified financial advisor who can help tailor a plan to your specific circumstances and risk tolerance.

Use this T. Rowe Price Retirement Planner as a powerful starting point to take control of your financial future and work towards a comfortable retirement.