Do you know how much you need to save for retirement, college, or a home?

This handy savings calculator from Lifetuner.org helps you answer that question.  Just plug in a yearly savings amount (like $200/month = $2400/year), the ages you start and stop investing, your desired retirement age, and an interest rate.  For this last assumption, I would use 6.8% (or 7% if decimals are too much to handle) to match the historical, real (inflation-adjusted) stock market return.  That way you won’t fool yourself into thinking you’ll have more purchasing power (which is what matters) than you really will have.

You can run up to three side-by-side simulations.  Compare starting ages, amounts you save, or the difference due to small interest rate changes.  This is a great calculator for estimating the return from regular investing, or the difference in gain from, say, a 0.5-1% increase in return due to switching to low-fee index funds, which beat the returns from (higher-fee) actively-managed mutual funds 70 – 80% of the time.

You can use this to calculate ANY regular investment, not just one for retirement.  For example, if you want to have a house downpayment in 3 years, assume a bond fund return of 3-5% (rates are low today) and then see how much you’d need to invest yearly to achieve your goal.  The longer you can wait, the more you’ll have.

Or, to calculate savings for your kid’s college (new parents, pay attention!), enter your kid’s current age as the ‘start saving’ age and 18 as the ‘stop saving’ & “retirement” ages.  (“Retirement” in this calculator just means the date when you want to know how much you’re investment will be worth.)  Use the historical, real, stock market return of 6.8% if you have a long time (>5 years) to invest, since that’s where your college savings should be.

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5 Responses to “Do you know how much you need to save for retirement, college, or a home?”

  1. Intro to Investing (asset allocation, stocks, bonds and more!) « Words of Ward: Ward's Guide to Personal Finance and Investing Says:

    […] What does it matter to you what happens to the stock market in the next 30 years as long as you insure yourself against permanent loss by having a well-diversified stock portfolio? (We’ll talk about the best way to diversify in the next article.)  All you care about is what the value of your investment is at age 65.  Anything that happens in between shouldn’t bother you one bit.  There’s an easy way to avoid this stress; don’t check your retirement balance more than once every year until you get close to retirement.  Instead, focus on what you can control and pump as much money as you can into your 401k/IRA.  (Calculate how much you’ll need to save here.) […]

  2. Earn 11% on grocery purchases towards your kid’s college fund with Upromise.com « Words of Ward: Ward's Guide to Personal Finance and Investing Says:

    […] tuition.  As you should know, the most important component to determining future wealth through savings is the time that you can let those savings compound.  So, even if you don’t have kids yet, […]

  3. Four Simple Steps for Guaranteed Wealth « Words of Ward: Ward's Guide to Personal Finance and Investing Says:

    […] paycheck deductions to automatically save for your future.  Once you set up that 10% 401(k) deduction, you’ll never even miss the money.  […]

  4. Saving for college – Where should you put your money? « Words of Ward: Ward's Guide to Personal Finance and Investing Says:

    […] away to give your money a chance to grow.  How early you invest is the biggest factor in your future wealth. Read the below and start socking away money for education […]

  5. Smoking is bad for your wealth: Quit today! « Words of Ward: Ward's Guide to Personal Finance and Investing Says:

    […] at age 30 and retired at age 65, their 35 years’ worth of cigarette savings would’ve grown to $206,000 (in real dollars) given historical stock market returns of […]


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