About half of consumers reaching retirement age today are not financially prepared. The objective of Retirement Saver is to make sure you don’t become one of them. If your retirement is at least several years away and you haven’t begun to accumulate a significant nest egg, Retirement Saver can show you how additional saving today translates into higher income at retirement. If you are a homeowner, Retirement Saver also shows how your home equity can be used to generate even more income in retirement.

Why do we ask for “gender”? Because Retirement Saver can use an annuity to create a lifetime income stream in retirement, and the insurance companies that sell annuities base the price of the annuity - in part - on the gender of the retiree.

Taking account of tax issues can be very important in retirement planning; however if you prefer a simplified illustration of how a savings plan can increase your available retirement income relative to not saving, check the box. Doing so will, in general, cause Retirement Saver to overstate the income you can expect in retirement.

Taking account of tax issues can be very important in retirement planning; however if you prefer a simplified illustration of how a savings plan can increase your available retirement income relative to not saving, check the box. Doing so will, in general, cause Retirement Saver to overstate the income you can expect in retirement.

Enter your best estimate of the average tax bracket you expect to be in prior to retirement. As a reference, the following table shows tax rates by income in 2023:

The Long Term Capital Gains bracket is the tax rate you pay on the sale of assets (such as stocks or some mutual funds) that you’ve held for over one year. Note that for some types of investments - such as mutual funds - you may be subject to capital gains tax even if you did not sell shares in the fund. Enter your best estimate of the average long term capital gains tax bracket you expect to be in prior to retirement. As a reference, the following table shows the long term capital gains tax rates in 2023:

Enter your best estimate of the tax bracket you expect to be in when you start retirement. As a reference, the following table shows tax rates by income in 2023:

Enter your best estimate of the long term capital gain tax bracket you expect to be in when you start retirement. As a reference, the following table shows tax rates by income in 2023:

Enter your best estimate of the average portfolio mix for your savings/investments before you retire.

Enter your best estimate of the average portfolio mix for your savings/investments after you retire.

This number is a measure of how aggressively assets in a fund are bought and sold during a 12 month period; 100% means that every underlying asset in the fund is sold in a year, and 0% means no assets are sold. You can get the turnover ratio from your fund manager; if you have multiple funds or are unsure what number to use, enter 50% if your investments are primarily in mutual funds and 25% if your investments are primarily in ETFs (Exchange Traded Funds).

If your employer provides a partial or full match to your 401(k) contributions, enter the percentage “match” here. Example: if your employer matches 50 cents on the dollar of your contribution, enter 50%. You can enter more than 100% if applicable.

If your employer provides a partial or full match to your 457(b) contributions, enter the percentage “match” here. Example: if your employer matches 50 cents on the dollar of your contribution, enter 50%.

Since you have significant financial assets for your retirement plan, you can enter a positive rate of return on those assets. If you leave the rate at zero, in all probability you will have excess financial assets and/or HECM credit line at the end of 10 years when the annuity payments begin. You can view that as a bonus that you can use in any way you see fit.

If you enter a rate of return above 0%, your spendable funds line will be higher. However, if the realized rate of return turns out to be lower than the rate you enter, your spendable funds will dwindle until the annuity begins. The annuity amounts will not be affected by a rate shortfall.

The Federal Reserve aims for 2% annual inflation, so Retirement Saver assumes your annual retirement income will increase by 2% every year. This will help keep your purchasing power consistent over time. If you want to assume a higher or lower annual inflation rate, enter a different number than 2%. Note that the higher you set your inflation rate, the lower your initial retirement income will be.

The only way to guarantee a lifetime stream of income in retirement is to purchase an annuity - specifically an “income” or “longevity” annuity. Unlike stock or bond investments - which have risk of significant loss - annuities are guaranteed by the insurance companies that issue them (defaults by insurance companies in the United States are very rare). By checking this box, Retirement Saver will assume that you purchase a Deferred Income Annuity when you retire with a portion of your savings. If you don’t check this box, Retirement Saver will calculate your retirement income such that your savings last until age 104 - assuming that the Return on Financial Assets you enter on Step 2 actually happen.

Relative to the amount of home equity that you have, your financial assets are too low to use this plan..

The number you enter here is the amount your savings grows each year. (If you keep your savings in your mattress, the return would be zero.) Most savers plan to invest their savings - their financial assets - in some combination of stocks (equities) and bonds (fixed income). Of course, no one knows for sure what will happen with investment returns in the future, but the table below may be helpful in deciding which rate to use; it shows typical returns from 1926 - 2020 based on various allocations of savings between fixed income and equities investments.

Note that the rates in the table below and the rate you enter are "pre-tax" rates.

Over long periods, home values have appreciated about 4% a year, and this value is used by HUD in stipulating the withdrawal amounts on HECM reverse mortgages. Homeowners who have good reasons to believe that their home will appreciate faster or slower than the average can modify the appreciation entry accordingly.

The amount you are currently obliged to pay monthly toward the principal and interest of your mortgage.

The current annual interest rate on your mortgage.

The cash refund option is a hedge against the risk of early death. If you select this option and you die before the total amount of annuity payments to you equal or exceed what you paid for the annuity, your estate will receive the difference. Selecting this option will reduce annuity income. If you are unsure about it, run Retirement Saver twice -- with and without the option.

The deferment period is the amount of time between when your annuity is purchased - at the start of retirement - and when you begin to receive annuity income. Until annuity income begins, income comes from financial assets and/or a reverse mortgage. In most cases, 10 years works best but you can try out periods that are a little longer or a little shorter to see if the results can be improved.

Enter the total value of financial assets (stocks, bonds, savings, etc.) that you have saved for retirement. This is the current value of these assets.

If you are a homeowner, Retirement Saver will show how you can optionally increase your retirement income by augmenting your savings with a HECM Reverse Mortgage. (If you rent, just enter zero.)

If you rent you can leave this blank.

If you rent or don’t have a mortgage, enter zero.

How you pay taxes on money you save/withdraw from your retirement account(s) depends on the type of account(s) and can have a significant impact on the actual amount of after tax retirement income you can generate from your savings. For simplicity (and to make it easy to compare how using different retirement account types affects your retirement income) Retirement Saver assumes you place all your retirement savings (including the amount of current Financial Assets you entered on Step 4 and all the money you save based on the plan in Step 6) in one type of account that you select below. Note that not all types of account “plans” are available to everyone; you should always consult your employer and your tax advisor before making any retirement plan decisions.

This type of account has no tax benefits like those inherent in an IRA or 401(k); you don’t get a break on your taxes in the year you save/invest, and you pay taxes on interest every year you earn interest and on capital gains in any year that investments are sold.

A Traditional IRA is a tax advantaged account where the contributions you make before retirement come from your pre-tax income; in other words you get a tax break in the year you make the contribution. In addition, all earnings and gains on the IRA are tax free prior to retirement; you pay taxes on withdrawals from the IRA (when you retire) at your then current ordinary income tax rate. Traditional IRAs are subject to RMDs (Required Minimum Distributions) in each year of retirement; in addition there are restrictions on the amount of IRA funds that can be used to purchase an annuity.

A Roth IRA is a tax advantaged account where you make contributions with after-tax dollars (which don’t get a tax break in the year you make a contribution). However, all earnings and gains on the account are tax free - and you don’t pay any taxes during retirement when you withdraw funds from the Roth IRA. There are restrictions on Roth accounts, including a maximum income you can have in the year you make a contribution. You should always consult a tax advisor before deciding whether a Roth account is right for you.

A Traditional 401(k) is an employer sponsored tax advantaged account where employers frequently make a matching contribution. The contributions you make before retirement come from your pre-tax income; in other words you get a tax break in the year you make the contribution. In addition, all earnings and gains on the 401(k) are tax free prior to retirement; you pay taxes on withdrawals from the 401(k) (when you retire) at your then current ordinary income tax rate. Traditional 401(k)s are subject to RMDs (Required Minimum Distributions) in each year of retirement; in addition there are restrictions on the amount of traditional 401(k) funds that can be used to purchase an annuity.

A Roth 401(k) is an employer sponsored tax advantaged account where employers frequently make a matching contribution. WIth a Roth 401(k) you make contributions with after-tax dollars (which don’t get a tax break in the year you make a contribution). However, all earnings and gains on the account are tax free - and you don’t pay any taxes during retirement when you withdraw funds from the Roth 401(k). There are restrictions on Roth 401(k) accounts; you should always consult a tax advisor before deciding whether a Roth account is right for you.

A Traditional 457(b) is an employer sponsored tax advantaged account offered to employees of certain government and non-profit entities. The contributions you make before retirement come from your pre-tax income; in other words you get a tax break in the year you make the contribution. In addition, all earnings and gains on the 457(b) are tax free prior to retirement; you pay taxes on withdrawals from the 457(b) (when you retire) at your then current ordinary income tax rate.

A Roth 457(b) is an employer sponsored tax advantaged account offered to employees of certain government and non-profit entities. With a Roth 457(b) you make contributions with after-tax dollars (which don’t get a tax break in the year you make a contribution). However, all earnings and gains on the account are tax free - and you don’t pay any taxes during retirement when you withdraw funds from the Roth 457(b). There are restrictions on Roth accounts; you should always consult a tax advisor before deciding whether a Roth account is right for you.

Use this section to define a proposed savings plan you will put in place between now and retirement. Note that you can specify monthly, quarterly, semi-annual, or annual contributions to the plan; you can also delay starting the plan for a number of months. The Annual Increase field allows you to plan for a constantly increasing contribution. Importantly, you can try different plans to see how they affect the amount of spendable funds you’ll have in retirement.

Instead of entering a savings “Amount”, you can instead check this box to have Retirement Saver compute the savings “Amount” that will result in a desired monthly income at the start of retirement that you enter below.

Since you are doing an after-tax analysis as part of your plan, enter your desired after-tax income for "Desired Monthly Income".

Since you are skipping a tax analysis for now, enter your desired pre-tax income for "Desired Monthly Income".