The Retirement Cost Calculator

Getting ready to retire or want to see what it takes to reach your retirement goal?  Check out this great tool found in Morningstar Investment Research Center.

The Training Corner | by Lars Wasvick, Associate Product Manager

The Portfolio page is one of the new features on Morningstar Investment Research Center. Not only does it provide you with investing and asset-allocation commentary, but it also includes some great new tools. One of those is the Retirement Cost Calculator.

With our retirement tool you can quickly define retirement target goals. The calculator allows you to calculate such things as how much savings you need to retire, how much you need to save, and what level of return you need to reach the goal.

To access the tool, click on the Retirement Cost Calculator link under the Portfolio section on the homepage, or go to the Portfolio page and select it from under Calculators. Once the page is loaded, you will have the option to solve for annual retirement income, current and annual savings needed, and annual return needed.

You can get your results by inputting your information in the spaces provided for circumstances. Such things as your age, gender, returns, and savings will be taken into account to determine the results.

For example, if you would like to get $30,000 in annual income when you retire, the calculator will help you determine what you need to save each year to reach that goal. To do this you will need to input your income requirement, current savings, and annual return.

One question you may have is what the annual risk-free rate is. This is the interest an investor might expect a risk-free investment to generate over a period of time. An often used number for this is the three-month Treasury Bill yield, which you can find on the Markets page of the database.


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