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Tools: Investing for Retirement Calculator

100.00% Free tools and resources to help you analyze and optimize your personal finances and your investing.
Free Investing Guide

10 actionable steps how to grow your capital with investing.

Tools: Investing for Retirement Calculator:
Input your (1) Income and Tax-Rate, then (2) Living Costs, and then (3) your targeted Investment Return. Hit submit and watch how your wealth grows over time WITH investing.

There are 'average' numbers pre-set, please just adjust the numbers to your situation.

If your income and cost are not denominated in USD ($), then assume all numbers are in your local currency.

Please note, that none of this is financial or investing advice. This is only for educational / entertainment purposes.


INPUT: (1) Monthly Income, Tax Rate / (2) Monthly Living Cost / (3) Annual Investment Return





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Explanation (1): Investing Calculator Overview


What is the investing calculator?

The investing calculator is designed to for you to effortlessly analyze your personal finances and your investing. It is a tool as part of your learn how to invest journey. Most importantly, it will show you the power of investing. See the major differences in your capital and wealth growth WITHOUT investments versus WITH investments.

Here are the key advantages:

Income

  • Income: Understand your income better on a monthly but also on a yearly basis.
  • Compare your income before and after tax and living cost, respectively.
  • Income Evaluation: compare your income to the average US income or your local average income. Try to achieve an above average income over time (US average is $64,530).
  • Optimization: there are always ways to optimize your income. Find them, pursue them and improve. It will be pay off.

Expenses

  • Expenses: Understand your cost better on a monthly but also on a yearly basis.
  • Living Cost: categorize your living expenses and understand in which categories you spent how much and why. Identify and eliminate unnecessary cost.
  • Two major Expenses: most understand that living cost are a key expense but most forget tax expenses. The tax bill is often the largest bill we have!
  • Tax optimization: the tax bill needs to be reduced. Use a tax expert or study tax law. There are always ways to reduce it dramatically.
  • Tax rate evaluation: get an evaluation of your tax expense compared to your pre-tax income. It should be optimally below 35%.

Savings (Residual Income)

  • Savings: if you deduct taxes and living cost from your pre-tax income, you get your savings (or residual income).
  • Savings Rate Evaluation: this will show you how big your savings are compared to your after-tax income. Try to achieve a Savings-Rate of over 50%! Spend less, earn more!
  • Wealth formula: the wealth formula means INCREASE INCOME, REDUCE COST, INCREASE SAVINGS.

Investments

  • Time for Money vs. Money for Money: your income comes from your work energy and time. Financially savvy people invest their savings in order to generate money from money.
  • Investment Income: the nice thing is, you don't work it. You earn while you sleep. Learn to invest!
  • Investment Evaluation: the tool will evaluate your current annual investing return. Higher returns will make a big difference in the growth of your capital.


Explanation (2): Key Inputs of the investing calculator


What are the key inputs of the investing calculator?

The investing calculator only needs a few inputs such as your monthly after-tax income, your tax-rate and your living cost. It is designed to minimized the effort for you.

This is how all of the inputs are defined.

Income Tax-Rate

  • Monthly Income, After-Tax: Just insert the number of your total monthly income, after-tax. These are the numbers you receive on your bank account.
  • Tax-Rate: use the tax-rate from last year. Just divide your after-tax annual income by your pre-tax annual income.

Living Cost

  • Rent: this is a major expense for most. Always ask yourself if your rent is in healthy proportion to your income. If you own a place, use your mortgage/interest payments instead of rent.
  • Food/Drink: cost for food and drink that you consume at home.
  • Car/Transportation: include the costs for your car including fuel, insurance, repair and interest payments if you have a lease. Add other transportation cost (train, bus, taxi) as well.
  • Medical: these cost can be quite high depending on your age. Consider regular medical expenses but also factor in potentially upcoming irregular medical cost.
  • Restaurants/Party: include food and drink cost that you consume outside of your home (and not travel related), as well as celebration related cost.
  • Travel: include total travel cost. Make sure to consider transportation cost (e.g. car/plane), accomodation cost (e.g. hotel/airbnb), food and drink during travel, celebration cost, excursion cost, etc.
  • Cell Phone: consider cell phone bills or other major communication cost that you have.
  • Other: if you don't find the right cost category, put everything in else in this category.
  • Unforeseen: there are often unsuspected cost that are irregular but can be quite high sometimes. Include a cost buffer in this category to be safe.

Annual Investing Return

  • If you don't invest currently, I would still urge you to insert a positive annual investing return to see how your wealth would grow if you would invest.
  • Average investing returns are around 8% per year. Good investors have above 8 and below 19 percent. Great investors above 20 percent. Even if you achieve these numbers only for a few years, the result can be very rewarding!
  • The power of investing: I would highly recommend that you learn how to invest. Try some higher investing returns and see the true power of investing and the compounding of wealth.


Explanation (3): Key Outputs of the investing calculator


What are the key outputs of the investing calculator?

The investing calculator will give you a lot of valuable outputs. It will include income and cost numbers but most importantly numbers to see and evaluate the growth of your savings, investments, total capital and wealth.

This is how all of the outputs are defined.

Annual Income

  • Annual Income ($, Ater-Tax): you calculate it by deducting tax expense from your pre-tax annual income.
  • Annual Income ($, Before-Tax): this number is usually found on your paycheck.
  • Annual Income ($, Ater-Tax): you calculate it by deducting, both tax expense and the total sum of living cost, from your pre-tax annual income.

Monthly and Annual Cost

  • Total Living Cost ($, Monthly): this will be the sum of your monthly living costs including monthly rent, food/drink, etc.
  • Total Living Cost ($, Annual): this is the annualized number of total living cost.
  • Tax Expense ($, Annual): this is the annual amount of all taxes.

Years to double and triple income (including the income numbers)

  • Years to double income (Investing Income > Savings Income): the tool calculates how many years it takes until your investing income (assuming you put your savings into investments, it is the WITH INVESTING number) is higher than your savings income (WITHOUT INVESTING, if you just save your residual income).
  • Monthly Investing Income in that Year (doubled income): this is the money that you earn from your money (your investments) on a monthly basis in the year that your doubled your income.
  • Monthly Savings Income in that Year (doubled income): this is the money that you earn from your time/work/energy (your job) on a monthly basis.
  • Years to triple income (Investing Income > 2*Savings Income): same as above except, now you tripled your income. You have your savings income but your money now earns you two times that saving income ADDITIONALLY.
  • Monthly Investing Income in that Year (tripled income): same as above, but now monthly investing income in the year that you tripled your income.
  • Monthly Savings Income in that Year (tripled income): same number as above.

Years to double and triple assets (including the assets numbers)

  • Years to double assets (Investing Assets > Savings Assets): the tool calculates how many years it takes until your investing assets (assuming you put your savings into investments, it is the WITH INVESTING number) is higher than your savings assets (WITHOUT INVESTING, if you just save your residual income).
  • Assets from Investing Profits in that Year (doubled assets): these are assets that are generated from the money that you earn from your money (your investments) on cumulated basis, reported for that particular year where you doubled assets.
  • Years to triple assets (Investing Assets > 2*Savings Assets): same as above, but in addition to your assets from pure savings, you now have two times your savings as investing assets ADDITIONALLY.
  • Assets from Investing Profits in that Year (tripled assets): same as above, but assets are now tripled.

Years to reach $100K and $1M

  • Years to reach $100K: this assumes WITH INVESTMENTS (you do invest). It will calculate the number of years it takes, until your total wealth (your total capital: savings plus all investments) will reach $100K. Without investments it would take considerably longer.
  • Years to reach $1M: this assumes WITH INVESTMENTS (you do invest). It will calculate the number of years it takes, until your total wealth (your total capital: savings plus all investments) will reach $1M. Without investments it would take considerably longer.