| Retirement calculations are geared towards | | | | working for you) and funds for other retirement |
| determining how much money you need for your | | | | expenses that arise every so often. The calculation |
| golden years. However, you also need to consider | | | | attempts to model what might happen to your |
| how well your desired nest egg would withstand the | | | | retirement savings in different scenarios. The reality is |
| risks of that period. It is particularly important for you | | | | that your accumulated savings would be |
| to anticipate your longevity risk. A post-retirement | | | | simultaneously affected by accumulations and |
| calculation helps you to discover how long your | | | | withdrawals. In addition, it factors in the erosive |
| money might last. | | | | effect of inflation on your retirement savings. |
| Naturally, you would be required to make a few | | | | Your post-retirement calculation will weigh the |
| realistic and reliable assumptions, given that a | | | | positive effects against the negative effects on your |
| post-retirement calculation is a mathematical model | | | | savings. The positives will be your retirement income |
| based on present figures and future projections. The | | | | stream(s) and accumulation rate. The negatives |
| good thing about a post-retirement calculation is that | | | | would be your annual withdrawal rate and inflation. |
| you can perform it before your retire or afterwards. | | | | What the results show is what happens to your |
| Given that you should plan for a retirement period of | | | | savings balance over as the years go by. Your |
| 30 years on average, can your nest egg survive that | | | | balance would gradually decline, owing to the effects |
| long? | | | | of inflation. If the nest egg is small, the withdrawal |
| The first thing you need to do is gather some | | | | rate is high, accumulation rate is low or you are not |
| relevant information. To perform this calculation, you | | | | saving from your income, your longevity risk will be |
| will need:a) A value for your retirement savings | | | | far higher. |
| (actual or anticipated)b) Your actual or potential | | | | A post-retirement calculator attempts to determine |
| sources of incomec) An annual withdrawal rate from | | | | the extent of your longevity risk by indicating how |
| your accumulated savingsd) Projected inflation during | | | | many years your nest egg would likely last. Once you |
| retiremente) An average rate of return for your | | | | know the extent of longevity risks, you can manage |
| savings (accumulation rate)f) Your current ageg) Tax | | | | critical variables that could reduce your longevity risk, |
| rate | | | | without falling into abject poverty in the latter stages |
| A post-retirement calculation assumes a dual role for | | | | of retirement. |
| your savings - provision of retirement income (money | | | | |