Question 1

Why is it important to start saving early for retirement?

Accepted Answer

Starting early is the most powerful factor in retirement saving because of compound interest. The longer your money is invested, the more time it has to grow, with your earnings generating their own earnings. Even small, regular contributions can grow into a large sum over several decades.

Question 2

What is the 4% Rule?

Accepted Answer

The 4% rule is a guideline suggesting you can safely withdraw 4% of your savings in your first year of retirement and then adjust that amount for inflation annually without running out of money for 30 years. This calculator uses it to estimate your savings goal.

Question 3

What is a 'shortfall' in retirement planning?

Accepted Answer

A shortfall is the gap between your estimated savings at retirement and your required savings goal. If this calculator shows a shortfall, it means you may need to increase your contributions, work longer, or adjust your retirement income goal.

Question 4

What is a realistic interest rate to assume for retirement savings?

Accepted Answer

A realistic long-term interest rate depends on your investment strategy. A conservative portfolio might earn 4-5%, while a more aggressive, stock-heavy portfolio has historically returned 7-10% annually on average, though with higher risk. It's often wise to use a more conservative estimate for planning.

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