I’ve played around with a number of retirement calculators out there online, but I haven’t been completely satisfied with any of them. The main problem I’ve found with most is that they don’t offer much in the way of visualization. If they do have a graph, it’s usually just a bar chart or something that doesn’t provide an effective way of seeing how your money grows over time.
So, over the past couple of weeks, I decided to develop my own tool so I could play around with the numbers and visualize what small changes in contributions to retirement plans would amount to over the long run.
Feel free to head on over to the Gradual Millionaire Retirement Calculator to check it out!
When you go to the page, you’ll simply need to enter a few details about your situation. By the way, I have programmed the tool in such a way that all of the calculations are done in your browser, so I have no way of seeing your numbers even if I had any interest whatsoever in doing so. All you have to do is enter:
- Your current age
- Your annual income
- How much you already have stocked away in retirement accounts (if you don’t have any money invested yet, you can just enter zero here. We’ll cover how to start investing in your retirement in a future post).
- Annual contribution percentage. This is the percentage of your salary you plan to contribute toward retirement. By default, this is set to 15 since that is generally a good rule of thumb, but it depends a lot on your age and your specific goals. If you’re on a tablet, you’ll have to press the point you want rather than sliding.
- The age at which you want to retire. This is set to 65 as that’s the standard for Americans. I personally never plan to work anywhere close to that long, but feel free to put whatever number you like here just to see.
- The interest rate at which you assume your investments will grow. Most investors say that somewhere between 7-10% is reasonable when investing over the long haul in mutual funds, so go ahead and see how your numbers change when you slide this percentage around. It’s amazing to see what a huge difference a percentage point makes over decades of compounding interest.
Last, but not least, go ahead and press “Calculate!”
A graph will magically appear on the page. You can slide your mouse over the graph to see how much money you’ll have in investments at any specific age you like. Tip: slide your mouse between two consecutive years in the later part of your life, such as in your late 50’s or your 60’s. It’s pretty awesome to see just how much money you’ll be raking in every year for doing absolutely nothing! This is why I think having an interactive visualization is powerful. You can more easily see the power of compound interest working in your favor! If you’re viewing the page on a tablet, you can see any point on the graph by simply pressing on the graph.
I hope this proves both fun and inspiring to you! Take advantage of the tool by seeing how much more you’ll have in retirement if you contribute a couple extra percent from your salary, if the interest you earn is a little higher or lower than average, or if you retired later/earlier.
Please let me know if you have any comments or suggestions on the tool that you think would make it even more useful. I’d also love to hear if there was anything surprising you found using it!