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When planning your retirement income, there's a lot more to consider more than a set amount of years. Not sure what that entails?

Using a retirement income calculator gives you a unique ability to see what your future may hold. It allows you to model your situation at retirement, which can provide some valuable insight into the strength of your retirement income.

Below, we'll tell you all you need to know to plan your retirement using a retirement income calculator.


Why use a retirement income calculator?

Having the right amount of income in retirement is crucial. It can spell the difference between the dreaded retirement your grandparents had and living the best years of your life.

If you use our retirement income calculator, you'll have an idea of your income during retirement -- giving you an effective way to plan for the future.

Getting Started

To get started with the calculator, you'll need to provide a realistic projection of your savings balance, annual contributions, and time horizon.

With all the necessary details, this tool provides you with an estimate of your future income before and after taxes.

This rate may vary depending on the state and federal tax laws during your retirement. So it's recommended that you consult a tax professional to learn more about your possible tax liability.

Confused about your retirement strategy?

You don't have to be Warren Buffet to develop your custom roadmap to retirement.

Read on to learn what to consider when planning your retirement.

How much income will you need during retirement?

There isn't an easy answer to this question. There are a lot of personal factors you need to think about.

Some experts say that you may need 100 percent of your pre-retirement income during your first 10 years of retirement.

Others recommend sticking to an income replacement rate of 75% to 80% throughout retirement.

Important Considerations

It all starts with where you live. The cost of living is different in every state.

  • The most expensive state to retire in is Hawaii, then California.
  • The cheapest state to retire in is Mississippi followed by Arkansas.

Another factor you need to take into consideration is your lifestyle.

  • How much do your hobbies cost?
  • Are you going to want to travel?

Expenses In Retirement

Retirement doesn't mean that your spending will slow down. On the contrary, your spending on certain things such as travel and healthcare may increase.

It's important that you make a realistic retirement budget that gives you some wiggle room. While you may be young and healthy now, there is a possibility that can change.

  • Will you be prepared for any bumps in the road?
  • Can an emergency jeopardize your livelihood?

Your Retirement Plan

In your budget, you should include your expected utilities, medical costs, travel allowance, and more. Looking at your current spending can help you in determining your baseline needs.

Another factor to consider when planning your retirement is longevity. Improvements in healthcare and lifestyle are allowing us to live longer.

This can make retirement planning challenging.

Bottom Line

In the United States, it is estimated that you will need between $949,110 to $2.1 million dollars during your retirement.

These numbers may vary depending on your pre-retirement income, state of residence, lifestyle, and investments.

Do you have to pay taxes on your retirement income?

Taxes are one of the biggest headaches for retirees. Figuring out the taxes you'll pay on your income during retirement is complex. Your income can be taxable, partially taxable or tax-free.

Retirement Plans

If you make withdrawals from your retirement plan, this income can become taxable if funded by you or your employer from pretax dollars.

By contrast, Roth earnings can be withdrawn tax-free.


Most pensions are taxable. Some exceptions to this rule are military and disability pensions.


Investment income from nonretirement accounts is taxable as well.

The amount of tax you pay will depend on your earnings, whether from interest, capital gains or dividends from tax-deferred accounts.

Also, capital gains that fall in the zero percent tax rate won't be taxable, if your income is below a certain limit.


Some withdrawals from your annuities are taxable.

According to the IRS, you must first withdraw any gain from your annuity. This withdrawal is taxable as income.

After you withdraw your annuity gains, you'll be withdrawing from your principal and cost basis. Basis withdrawals aren't taxable.

Social Security

Fifteen-percent of your social security earnings is tax-free.

The tax rate on your remaining social security income will depend on your tax bracket.

If your total income for the year falls under a certain threshold, your income may be tax-free.


Other income that may be taxable in part is nondeductible IRA withdrawals and earnings from cashing in a cash value life insurance policy.

Read to plan your retirement?

Our retirement income calculator is a great place to start.

And hopefully, with this guide in your arsenal, you're in a better position to secure your future.

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