Calculate Your Client's Retirement Needs
Your clients are just as interested in their retirement as you are in yours.
Often they will ask you to help them plan toward their golden years. Certainly,
there are very sophisticated tools that you can use, but it's easy to calculate
your or your client's retirement needs with pencil and paper. Here's a simple
process you can use:
Line 1: Annual amount needed at retirement age in current dollars
Line 2: Number of years until retirement
Line 3: Annual expected benefits from employer plans...
Pension plan 401(k)
Other
Subtotal
Line 4: Annual expected benefits from personal assets...
Social Security
IRA
Other
Subtotal
Line 5: Grand total-- Line 3 added to Line 4
Line 6: Difference--Line 1 minus Line 5
If this is positive, it's how much extra you need each year to achieve your
annual retirement needs on Line 1.
NOTE: Since most items on Lines 3 and 4 should grow at the rate of inflation
or better, it's appropriate to use today's dollars in all lines.
If after you've collected the data and crunched the numbers the retirement
income falls short of what you think will be needed, you'll have to address
the question of how much to accumulate each year (Line 2) to produce enough
interest to make up for the shortfall.
Click HERE to Read a Similar Article Regarding Retirement
Savings
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