Paychex Retirement Calculator: Secure Your Financial Future

Financial planning for retirement is an incredibly crucial investment that many forget about. Retirement may seem far away, but the saving you do now will directly impact your retirement fund. If you’re unsure of where to start or how much you need to save, this retirement calculator tool is for you.

There are multiple factors at play when it comes to retirement including age, income, and potential contributions. You should also consider the power of compound interest and how that can further help you save for the future.

With a 401(k) account, you have the power to change your contribution amount to an amount that works best for you and maximize your yearly savings. You should also check to see if your employer may match your 401(k) contributions.

There are various guidelines you can follow, and each path is unique to your situation. Generally, people follow the 10%, 80%, or 4% rule for saving:

• The 10% Rule applies to those around 25 years old and requires saving 10-15% of annual pre-tax income toward retirement savings. The idea is that by saving 10% at such a young age, you should have large savings by the time you retire.
• The 80% Rule states that you should consider your retirement income to equal about 70-80% of your current annual income to sustain yourself in a similar financial situation during retirement. If your pre-retirement income was $45,000 annually, you would aim for about $36,000 per year in retirement income.
• The 4% Rule estimates how much you may need to save in total for retirement. If you believe you'll need $100,000 per year during retirement, divide that by 4% to get the estimated total amount needed: $2.5 million.

These rules are not one size fits all, please consult with your financial advisor before changing your savings setups.

Here's a guide to the language used in the retirement savings calculator tool:

• Annual salary: The total income you earn before taxes are deducted
• Tax information: Select the state in which you reside
• Current age: Enter your current age
• Retirement age: Enter the age you plan to retire. Age 67 is considered full retirement age (when you get your full Social Security benefits)
• Current savings: Enter the total current balances of all your retirement savings accounts, including 401(k) plans, IRAs, and any other savings or investment accounts
• Monthly contribution: Enter the percentage you save for retirement each month
• Employer match percentage: If your employer offers a match, enter the percentage matched to your retirement savings account

The amount of savings you should have by age 40 depends on several factors including cost of living, location, intended retirement age, and more. Considering most people elect to retire at 67, you should have a retirement savings account, and monthly contributions already selected to meet that deadline.

The amount of money needed to retire depends on many factors including location, cost of living, expenses/debts, and more. The amount you need to retire should consider your current lifestyle habits and what maintaining that would look like.

Those born after 1960 can begin collecting Social Security at age 67. If you were born prior to 1960, your full retirement age may vary slightly but will fall between 66-67 years old.

Retirement age is defined as the age one wishes to retire at. This may vary based on life circumstances and the amount you've saved up and are willing to retire with.

Your Social Security check amount will vary based on a variety of factors, including retirement age and the individual’s lifetime earnings.

Annual household income can be defined as your total household income: if you are married, this typically would include your spouse's income.

Annual income increase is the annual percent increase you expect in your household income.

Retirement savings refers to the amount that you have saved toward your retirement. Include all sources of retirement savings such as 401(k)s, IRAs, and annuities.

Yearly spend in retirement is defined as the total amount you would like to spend yearly during retirement.

A 401(k) yearly contribution limit refers to the maximum amount one is able to contribute to their 401(k) savings account within one year. Visit IRS.gov to learn more.

Employer match percentage refers to the percentage that your employer will match in contribution to your retirement savings account, like a 401(k). For example, if your employer matches up to 4%, you may decide to contribute 4% of your wages toward retirement and your employer will match that amount toward your retirement savings.