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Retirement Income Formula:
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Retirement income projection helps retirees estimate their monthly income by comparing annuity payments with the sustainable withdrawal rate from their investment portfolio using the 4% rule.
The calculator uses the retirement income formula:
Where:
Explanation: The calculator compares your guaranteed annuity income with the sustainable monthly withdrawal from your portfolio (using the 4% rule) and selects the higher value as your projected monthly income.
Details: Accurate retirement income projection is crucial for maintaining financial stability, ensuring sustainable withdrawals, and avoiding outliving your savings during retirement years.
Tips: Enter your fixed annuity payment and total portfolio value in your local currency. The calculator will determine your optimal monthly income strategy.
Q1: What is the 4% rule?
A: The 4% rule suggests that retirees can safely withdraw 4% of their portfolio annually, adjusted for inflation, without running out of money over a 30-year retirement.
Q2: Should I choose annuity or portfolio withdrawals?
A: This calculator helps you compare both options. Annuities provide guaranteed income, while portfolio withdrawals offer flexibility but carry market risk.
Q3: Is the 4% rule still valid today?
A: While debated, the 4% rule remains a useful benchmark, though some experts suggest 3-3.5% may be more appropriate in current market conditions.
Q4: What factors affect retirement income?
A: Market performance, inflation, lifespan, healthcare costs, and tax implications all impact sustainable retirement income.
Q5: Should I consult a financial advisor?
A: Yes, this calculator provides estimates. Professional financial advice is recommended for comprehensive retirement planning.