- Annual salary
- This is your annual salary from your employer before taxes and other benefit deductions.
- Percent to contribute
- This is the percentage of your annual salary you contribute to your retirement plan plan each year. Most employers permit employees to contribute up to 15 percent of their salary to a retirement plan.
- Annual contribution limits
- Your total contribution for one year is based on your annual salary times the percent you contribute. However, your annual contribution is also subject to certain maximum total contributions per year. The annual maximum for 2008 is $15,500. Beginning at age 50 and over, a "catch-up" provision allows you to contribute an additional $5,000 into your retirement plan account.
It is important to note that some employees are subject to another form of contribution limitations. Employees classified as "Highly Compensated" may be subject to contribution limits based on their employer's overall retirement plan participation. If you expect your salary to be above $100,000, you may need to contact your employer to see if these additional contribution limits apply to you.
Current age- Your current age.
- Age of retirement
- Age you wish to retire. This calculator assumes that the year you retire, you do not make any contributions to your retirement plan. So if you retire at age 65, your last contribution happened when you were actually 64.
- Current retirement plan balance
- The starting balance or current amount you have invested or saved in your retirement plan.
- Annual rate of return
- The annual rate of return for your retirement plan account. This calculator assumes that your return is compounded annually and your deposits are made monthly. The actual rate of return is largely dependant on the type of investments you select. From January 1970 to December 2007, the average compounded rate of return for the S&P 500, including reinvestment of dividends, was approximately 11.4% per year (source: www.standardandpoors.com). During this period, the highest 12-month return was 61%, and the lowest was -39%. Savings accounts at a bank can pay as little as 1% or less.
It is important to remember that future rates of return can't be predicted with certainty and that investments that pay higher rates of return are generally subject to higher risk and volatility. The actual rate of return on investments can vary widely over time, especially for long-term investments. This includes the potential loss of principal on your investment. It is not possible to invest directly in an index and the compounded rate of return noted above does not reflect sales charges and other fees that funds and/or investment companies may charge.
- Annual salary increase
- The annual rate you expect your salary to increase. We assume that your salary will continue to increase at this rate until you retire.
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