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How to Calculate the Most Feasible Retirement Income

Jun 15, 2008
Nowadays it's becoming more common to hear people talk about retiring early and a lot of people aren't just talking about it, they are doing it. Retirement isn't about old age nowadays; it's about getting enough to enjoy the various this that you could not enjoy when you were young.

Anyone with serious thoughts of retirement on their mind would probably be thinking how to afford the lifestyle most people want to partake in during retirement; a lot of people see themselves on a golf retirement community in Miami or some other such luxurious locale.

When and how you would retire depends on your planning. But essentially your prime concern should be to calculate your post-retirement income so that you can live your dream lifestyle, where you want it and how you want it. Most people refuse to adopt a Spartan lifestyle after retirement; after all this is the only time left for you to do things which you could not do when you were younger. Hence people wait to fulfill their pet dreams after they retire.

How to calculate retirement income goes beyond just thinking about it, you have to ask yourself whether you can realistically afford to retire early and determine whether you are prepared to do what it takes and work as hard as you need to in order to retire early. A retirement calculator will help you understand how to determine your income because it will factor in how much you actually need in order to live comfortably and retire early.

The most important part in getting the information you require is to identify the payout period. This is the length of time which you require your retirement funds to last for. In getting your payout period, you need to estimate your probably life expectancy. The IRS can provide you with a wonderful tool for this but you might want to pin on an extra 10 years or so to arrive at the payout period.

When you are able to identify your payout period, the next best thing to do is to calculate the withdrawal rate and adjust it for inflation. Also, you should determine the different investment risks that you are willing to receive.

Retirement calculation income also depends on your annual basis when you factor in your early requirement opportunities. You can calculate by arriving at your annual expenses figure then add an additional 5-8 percent in order to identify the funds that you require in order to enjoy living comfortably annually during you retirement. Aside from relying on this equation, you also need to look at inflation rate as well which should be about five percent taking into consideration the variances of historical data.

How to calculate retirement income can also be easier if you search the internet in order to find resources which provide online retirement calculators. These resources range from the very simple to the rather complex and will help in providing most of the answers to your questions and bring you closer to that dream of a luxurious retirement in a time hopefully not too far from now.
About the Author
The author is a participating researcher for Retirement Planning Software and specializes on topics concerning how to calculate retirement income.
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