This publication has been developed by the U.S. Department of Labor, 

Employee Benefits Security Administration (EBSA), and its partners. 

To view this and other EBSA publications, visit the agency’s Website at:

dol.gov/ebsa. 

To order publications or speak with a benefits advisor, contact EBSA 

electronically at: askebsa.dol.gov. 

Or call toll free: 1-866-444-3272 

This material will be made available in alternate format

to persons with disabilities upon request: 

Voice phone: (202) 693-8664 

TTY: (202) 501-3911 

U.S. Department of Labor

Employee Benefits Security Administration

in partnership with

created by

We also thank the AARP for its valuable contributions to this publication.

This booklet constitutes a small entity compliance guide for purposes of the Small Business

Regulatory Enforcement Fairness Act of 1996.

December 2014
3

TABLE OF CONTENTS

PLANNING FOR A LIFETIME 3

Chapter 1

TRACKING DOWN TODAY’S MONEY 6

Worksheet A-Today’s Money

Chapter 2

TRACKING DOWN FUTURE MONEY-AT RETIREMENT AND AFTER 10

Worksheet B-Your Money...10 Years from Today

Worksheet C-New Savings Between Now and Retirement 

Worksheet D-Monthly Income Over a 30-Year Retirement 

Chapter 3

TRACKING DOWN FUTURE EXPENSES 18

Worksheet E-Monthly Expenses Today 

Worksheet F-Monthly Expenses in 10 Years

Chapter 4

COMPARING INCOME AND EXPENSES 28

Worksheet G- Comparing Projected Income and Expenses 

Worksheet H-Additional Savings Needed Before Retirement

Chapter 5

MAKING YOUR MONEY LAST 36

Chapter 6

TRACKING DOWN HELP FOR RETIREMENT 42

RESOURCES 43
3

PLANNING

FOR A LIFETIME

It’s not going to be your parents’ 

retirement—rewarded at 65 with a 

gold watch, a guaranteed pension, and 

health insurance for life. For many 

Americans, retiring in this century is a 

mystery. Earlier generations of workers 

could rely on employer-provided 

pensions, but now many workers will 

need to rely on their own work-related 

and personal savings plus Social 

Security benefits. These savings have 

to last longer because Americans are 

living longer, often into their eighties 

and nineties.

If you are one of those people who 

want to plan – and are about 10 years 

from the day you retire – this booklet 

is for you. Today’s (and tomorrow’s) 

retirees may well have a newkind of 

retirement. With a longer and healthier 

life span, bikes, boats, planes, and RVs 

may be part of your life, because you are 

more likely than previous generations

to be an active older American.
4

Opportunities to take courses, start a 

new career, and become a volunteer 

can make your future an adventure. 

A longer life, however, will also mean 

more medical care, some of which will 

not be covered by the federal Medicare 

program. 

The whole retirement scene has changed and many 

American workers find it a mystery. In fact, a 2014 

survey by the Employee Benefit Research Institute 

(EBRI) suggests that only 44 percent of U.S. households 

have tried to calculate how much they need to save for 

retirement. In this booklet, each chapter will give you 

clues on how to take control of your finances so that when 

you retire, you have the time and money to do what you’ve 

always wanted. For some, it’s simply being with friends 

and family. For others, it’s starting a new hobby or craft. 

And for some, it’s starting a new life. 

Whether you are 10 years from retirement or have 

a different timeframe – or even if you are retired – this 

booklet will help you to unravel the financial mysteries of 

life after work and to discover changes you can make for a 

financially secure future. 

Time on Your Side

Getting started today will help you put time on your side. To 

help, Taking the Mystery Out of Retirement Planning offers a 

simplified, bottom-line approach to figuring out just how much 

you may need when you retire. The worksheetsin this booklet 

will provide a guesstimate. Regard them as a starting point.

Each chapter in this booklet asks you to chart a 

different part of your financial life – your savings and your 

expenses – and helps you project future costs and savings well 

into your retirement years. Of course, no one has a crystal ball, 

and life has a way of throwing changes our way. But getting time 

on your side now, before you retire, means you will not be awake 

at 3 a.m. worrying about, instead of planning for, the future.

How to Use This Booklet: Simply read it to get

Take your time. You may want to tackle one or 

two chapters, fill out the worksheets provided and 

then spend some time gathering the documents 

and information you will want to keep. Whether 

you approach the booklet chapter by chapter or 

all at once, keep going. Don’t get stuck on details – 

guessing is okay, and you can always come back later 

with more accurate numbers and information.

This booklet uses three time periods in charting your 

retirement savings. The starting point is today, when you are 

about 57 years old and plan to work approximately 10 years 

more. This is a good time to take stock of where you are in terms 

of retirement savings and set financial goals you would like to 

achieve in the 10-year period you plan to work.
5

The second point in time is the day you retire, when 

you are about 66 to 67 years old. That period between now 

and then is an important one. In those (approximately 10) 

years, you will have time to put more of your paycheck to 

work in a retirement account. It will grow, not only from your 

additional savings, but also from the “miracle of compounding,” 

the world’s greatest math discovery, according to everyone’s 

favorite genius, Albert Einstein. This is the result of earnings 

from interest and from investments continually increasing the 

base amount.

Finally, the third time period used in this booklet is 

the approximately 30-year span you hope to enjoy retirement.

It is the time period experts suggest you plan for, based on the 

average 67-year old American male living 16 more years and 

the average 67-year old female living 19 more years. These 

are only averages, so planning for 30 years will help you avoid 

outliving your income.

As you read through this booklet, keep an eye on the 

Timeline for Retirement that follows. Some of the terms, like 

“catch-up” retirement contributions beginning at age 50, may 

be new to you. The timeline offers some milestone opportunities to make changes so you can have the kind of retirement 

you want. The time to start is today.

CLUE 1

AT AGE 50 Begin making catch-up contributions, an extra amount that those 

over 50 can add, to 401(k) and other retirement accounts.

AT 59 1/2 No more tax penalties on early withdrawals from retirement 

accounts, but leaving money in means more time for it to grow.

AT 62 The minimum age to receive Social Security benefits, but delaying 

means a bigger monthly benefit.

AT 65 Eligible for Medicare.

AT 67 Eligible for full Social Security benefits if born after 1959 (slightly earlier 

if born between 1955 and 1959).

AT 70 1/2 Start taking minimum withdrawals from most retirement accounts by this age; otherwise, you may be charged heavy tax penalties in the future.

Timeline For Retirement:
6

Chapter 1

TRACKING DOWN TODAY’S MONEY

This chapter will help you shine a 

light on the mystery of where you will 

find the money to 

support yourself in 

retirement. Many people 

don’t have a clear idea of how much 

money they actually have, so it’s hard 

to know how much they might be able 

to count on when they no longer work. 

Finding out what part of today’s money 

can go toward retirement simply means 

adding up the value of all your current 

assets. In this case, “assets” are cash, 

investments, and anything of value you 

can exchange for cash, like your house, 

savings bonds, or even fine jewelry. This 

figure will be your first important clue.

Recording these amounts could 

be a pleasant surprise. You don’t want 

to count emergency money and savings 

for your children’s education or a big 

trip – only money that you are not going 

to touch for at least 10 years. For

purposes of the following worksheet, you also don’t want to 

include any future Social Security benefits and guaranteed 

pensions because these items are future income, not current 

assets (and they will be included later). Money 

in work-related retirement plans, like 401(k) 

plans, is counted, however, and you will want to 

include amounts from current and former jobs. In 

fact, these assets will probably be at the top of your 

“today’s money” list that follows. 

More Than You Think

Tracking your money in retirement plans should be fairly easy. 

If you didn’t roll over your retirement plan balance when you 

changed jobs into a new retirement plan account or into an 

IRA, or if you didn’t take your account balance as cash, you 

may discover some forgotten retirement assets you have. This 

is a good time to think about keeping your money with fewer, 

rather than more, quality financial institutions so it is easier to 

manage.

Recording current and old retirement account 

amounts on Worksheet A, Today’s Money (see page 9), is 

important for a couple of reasons. First, locating any old 

account could take time. The longer it’s “lost,” the harder it 

will be to find. Second, understanding your current financial 

standing should automatically start you thinking about how to 

make your money grow.

Quit Worrying, Start Planning

Remember you’re facing a retirement that’s probably 

going to be longer than your parents’ and will involve more 

uncertainties. This new kind of retirement probably means 

there are many American workers worrying about, instead of 

planning for, the future.

You can choose to stop worrying and start figuring. 

Not only will you come up with facts to work with, the chances 

are good you might change the way you save. The 2011 EBRI 

survey found that 44 percent of people who tried to figure out 

their financial futures ended up changing their retirement 

savings plans.
7

If you are a married 

woman: In preparing 

for retirement, women 

face the very real 

possibility of spending 

part of their retirement years without 

the support of a 

husband -- most 

likely through 

widowhood. The loss

of a spouse can sometimes mean the loss or 

reduction of benefits that can place women in 

financial jeopardy. For that reason, women will 

need to focus on their financial resources as a single person as well as half of a couple.

For purposes of the following worksheets, 

consider filling 

them out as a couple 

and as a single person. Consider what happens to your Social 

Security and to retirement benefits if 

your spouse dies or you divorce. Know what 

assets you can count on. Check Social Security 

benefit documents, retirement plan documents, 

and wills. Remember that wills are important, 

but they may not provide the protection desired. 

Depending on the way assets are titled or the 

terms of a will, the money women believe they 

can count on may not be passed to the surviving 

spouse.

When filling out the worksheets that follow,

remember to include your spouse’s assets if you’re married. 

Like all of the worksheets in this booklet, be prepared to 

redo this first one. A raise and changes in your investments, 

for example, will affect the numbers on Worksheet A. To 

make it easy, extra worksheets are included at the back of 

this booklet.

“44 percent of

people who tried 

to figure out their 

financial futures 

ended up changing 

their retirement 

savings plans.” Here you will write down money you have today 

that you plan to use when you retire in about 10 

years (do not add Social Security and traditional 

pensions at this stage; they will be figured in later 

on). The first money source, the balance on your 

current retirement plan account at work (a 401(k) 

ABOUT WORKSHEET A (PAGE 9):

TODAY’S MONEY
8

plan, for instance), 

should be easy to find. 

If you don’t have a 

recent statement, ask the 

benefits department at 

work.

If you rolled 

over accounts from 

former jobs into an IRA, then read your statement or 

call the financial institution holding this account. In 

addition, get statements from all your bank or mutual 

fund IRA accounts, “Keogh” retirement savings, 

Simplified Employee Pension-IRAs (SEP-IRAs), and 

Savings Incentive Match Plans for Employees of Small 

Employers (SIMPLE) plans. 

Personal savings and investments are next 

as possible retirement resources. They could be in a 

savings or checking account at a bank or credit union 

or in a brokerage account. The assets in these accounts 

may include cash, U.S. savings bonds, certificates of 

deposit, stock and bond mutual funds, and individual 

stocks and bonds. 

To get a dollar amount for your home equity, 

subtract the current mortgage balance from the 

current market value of your house. Also subtract 

the amount you owe on home equity loans or lines 

of credit (enter it as a negative amount on the 

worksheet). The bank holding the mortgage can 

provide the amount of your remaining mortgage 

balance. An appraiser or real estate professional can 

give you an estimate of the value of your house in 

the current market, or you can check on the Internet 

recent sales in your neighborhood (real estate values 

can change, however, so check your home’s value 

from time to time). 

Be realistic about 

how much of your 

home equity might 

be available 

for retirement. 

Remember that 

you will always need 

housing, and that condo fees, real estate taxes, 

maintenance and repairs, and rent tend to go up. 

Other assets could be valuable collections

or the cash value of life insurance. Keep in mind 

that the actual value of items like houses, boats, and 

collections can be determined only when real buyers 

make real offers.

“Be realistic about 

how much of your 

home equity might

be available for 

retirement... you

will always need 

housing.”
9

WORKSHEET A

TODAY’S MONEY

Instructions: Record amounts for yourself and for your spouse in columns 1 and 2. Add up the 

money across each row for you and your spouse and write the total in column 3. Then add all the 

numbers down column 3 and write the total in column 3 at the bottom.

Work-related retirement savings

1

You

2

Spouse

3

Total

401(k) or 403(b)

Keogh

SEP-IRA

SIMPLE IRA

Other

IRAs (traditional) 

IRAs (Roth)

Other

Home equity

Market value of home

Mortgage and liens (enter as negative amount)

Personal savings and investments

Other assets (collections, etc.)

TOTAL ASSETS
10 11

Chapter 2

TRACKING DOWN FUTURE MONEY-AT RETIREMENT AND AFTER

Now that you know from Chapter 1 how 

much money you have today, you can 

estimate how much 

that money could be 

worth – because 

it will probably 

grow – in the 10 years between now 

and retirement. The worksheets will help 

you project a 10-year total, which will 

help you estimate a 30-year total. Yes, it’s 

just a guesstimate, because the further 

in the future you plan, the more that can 

happen. But the totals give you some 

idea of how much you may have for your 

retirement years.*

In addition, the worksheets in

this chapter will let you see how much 

your money can grow by investing it in 

different ways. In fact, you will be able 

to assign different rates of return to 

different types of savings and to see how 

your decisions can impact the growth of 

your money over the next 10 years. Rates of return are simply 

the amount your money earns over a certain period.

How your money increases over time will depend 

on the nature of your investments, the rates of 

return, and other factors, such as the economy. 

One kind of investment, for instance, is a bond, 

which is often referred to as a “fixed income” 

investment because the interest rate is fixed. 

As an example, if you owned a bond with an original 

value of $10,000 and you got a 5 percent return (or yield) 

on your investment, your original investment would increase to 

$16,289 in 10 years. 

Digging Deeper

You will probably want to dig deeper by assigning different 

rates of return to different pots of money – workplace savings 

accounts, IRAs, bank savings accounts -- you have put aside 

for retirement. Let’s say you have $2,000 in a checking account 

that you never use. Your rate of return, in this case, with 

interest compounded monthly, will be low, maybe 1 percent. 

But your money is safe. Then let’s say you’ve invested in a stock 

mutual fund for 15 years using your retirement plan account 

and you get a return of 9 percent. Investments in securities 

can bring a higher rate of return than simple interest because 

prices of securities often rise and gains are compounded. Of 

course, security prices can fall, as we saw with stocks in 2000, 

2001, and 2008. The tradeoff for aiming for higher returns is 

taking on more risk, including the risk of losing money. Keep 

this in mind in selecting rates of return for the worksheets that 

follow.

In the example above, with some money invested in

stocks and some in a safer, interest-bearing account, you are 

already doing what the experts recommend. You are practicing 

“asset allocation” by putting your money in different types of 

products that earn different rates of return. Financial planners 

highly recommend this technique as a way to spread risk. A 

* People who are retired may want to skip the worksheets in this chapter and focus on the information about ways to grow your money.

general allocation is 

to have some money in 

“cash,” such as a savings, 

checking, or money 

market account with 

little or no risk; some 

money in bonds, with 

a little more risk but 

paying more interest; 

and some money in stocks, with more risk but a likely 

higher return, especially in the long run.

Another way to spread your investments among 

different categories is to invest in index mutual funds. Index 

funds are a collection of investments, such as bonds or stocks, 

that closely match the performance of the major holdings for 

that category of investment. 

For instance, a Standard and Poor’s 

(S&P) index fund tracks the 500 broad-based 

stocks that comprise the S&P 500 Index. A bond index 

fund would track the performance of major bond holdings in 

that index. In this way, your investment is following the financial 

market for that particular category. 

 Experts recommend that you spread your money 

among a range of investments so that your money is “diversified.” 

In addition, most experts add that you should not only invest 

among categories but within each major category as well. For 

instance, your risk of losing money is less if you buy shares in 

several mutual funds investing in various types of assets (such 

as large company stocks, small company stocks and bonds). 

Even investing in just one mutual fund will help you to diversify 

compared to investing in individual securities on your own, since 

mutual funds, by their nature, allow you to invest in a collection 

of stocks, bonds, etc. 

 Financial planners believe that diversifying your 

investments helps reduce risk as markets move up and down. 

For example, in 1980 when some certificates of deposit (CDs) 

were paying 12 percent, stocks were barely holding their own; but 

in 1999 most stock prices were rising fast, and CDs were paying 5 

“Experts

recommend that

you spread your 

money among a

range of investments 

so that your money

is diversified.”
12

Average Annual Returns

Over 10-Year Period: 2004-2013

CLUE 2

INVESTMENT 

PERCENT

Money market account 

1.37

5- to 10-year Treasury notes (a type of bond) 4.99

S&P 500 Index (large company stocks) 7.40

Russell 2000 Index (small company stocks) 9.07

Barclays Capital (long-term bond index) 4.55

percent. You will see sample rates of return for some common 

places to put your money in the box above.

Too much money in one type of investment is always 

a bad idea and puts your money at risk. For example, many of 

America’s workers are holding a lot of their employers’ stock 

in their retirement accounts. This ties both your current 

paycheck and your retirement savings to one employer’s 

success... or failure. This can be risky.

ABOUT WORKSHEETS B (PAGE 13) AND C (PAGE 15):

YOUR MONEY

AND NEW SAVINGS

One quick way to estimate how much money you 

could have by your first year of retirement is to 

multiply your total retirement assets from Worksheet 

A, Chapter 1, by 1.629 (the factor equal to a 5 percent 

rate of return for 10 years). The result shows how 

much you will have if your money grows at 5 percent 

in that 10-year period. For example:

$100,000.00 (total from Worksheet A)

 x 1.629

$162,900.00

The 5 percent return, by the way, is used to keep 

things simple: remember investment returns go up and 

down and cannot be guaranteed. 

But digging deeper may mean coming up with 

your own numbers, and the worksheets that follow let 

you do just that. To keep it simple, the worksheets give 

you a choice of rates of return – 3, 5, and 7 percent 

-- and include multiplication factors for each of these 

rates. (Instructions continue on pg. 13)
13

WORKSHEET B

YOUR MONEY10 YEARS FROM TODAY

Asset Growth Factors for Three Selected Rates of Return

1.344 for 3% 1.629 for 5% 1.967 for 7%

Work-related retirement savings

1

Current $ 

value

(from Worksheet A, 

Column 3)

2

Asset growth factor

(rate of return)

3

Asset value

in 10 years

(Column 1 x Column 2)

401(k) or 403(b)

Keogh

SEP-IRA

SIMPLE IRA

Other

IRAs (traditional) 

IRAs (Roth)

Other

Home equity

Market value of home

Mortgage and liens (enter as 

negative amount)

Personal savings and investments

Other assets (collections, etc.)

TOTAL ASSETS
14

They are lower than the 8 to 10 percent 

returns often used before the stock market fell in 

2000. Whether you’re an optimist or a pessimist about 

interest and rates of return, being conservative in your 

estimates is safer; better to have extra money than too 

little.

Worksheet B, Your Money – 10 Years from 

Today will let you take your current retirement saving 

sources and then figure out how much they might 

grow over 10 years, depending on how the money is 

invested.

In Worksheet B, you will be able to transfer the 

dollar amounts for your income sources directly from 

column 3 of Worksheet A, starting with 401(k) and 

403(b) plans. Then multiply each of these results by an 

asset growth (rate of return) factor you’ll see at the top 

of Worksheet B. Write the total in Column 3.

The rate you choose depends on what you’ve

done with your retirement savings. If they’re all in 

fixed income investments, your rate is predetermined. 

If they’re in mutual funds, you’ll need to do some 

research to figure out past rates of return as a 

guide for estimates for the future. Retirement plan 

statements should indicate past rates of return. But 

remember, for investments, past performance never 

guarantees future results.

Like Worksheet A, Social Security benefits and 

pensions are not included since you most likely won’t 

receive these sources of income until retirement. 

There will be more later in the publication about 

how waiting to receive Social Security (and pension) 

benefits will mean a bigger check.

Estimating a rate of return on your home will 

depend on the real estate market in your community. 

Figure a low estimate for this and for any personal 

property in which the value depends on how much a 

buyer would pay. Also consider any mortgage or liens 

you have on the home since those would be repaid 

from any cash you would obtain on the sale of the 

home. 

If you have other investments, such as

annuities, put them in the “Other assets” row of 

Worksheet B. In addition to these sources, include 

any money you can count on receiving in the next 

10 years – for example, an inheritance – and enter its 

estimated lump-sum value. 

As an example of a possible calculation,

suppose you have $10,000 in a traditional IRA, and 

you believe it will earn 5 percent over the next 10 

years. Your calculation would look like this:

$10,000.00 (amount in an IRA)

 x 1.629 (rate of return factor for 5%)

$16,290.00 (savings in 10 years)

When you have finished Worksheet B, go 

on to Worksheet C, New Savings Between Now and 

Retirement. This worksheet will allow you to take 

any additional workplace and personal savings you 

can expect to add between now and retirement and 

determine how much they will grow to at the time of

your retirement.

You can enter any estimated periodic 

contributions (such as to your 401(k) or IRA) 

between now and retirement in the first column. 

Remember that you are only estimating the rate of 

return on this money over a period of years and that 

you will need to review your estimate from time to 

time.

Multiply these amounts by the savings

growth factor for the rate of return you select from 

the top of Worksheet C. As with Worksheets A and 

B, three different rates of return have been selected 

but based upon the nature of your investments, you 

may want to use a different rate of return. Enter the 

results in the third column.
15

WORKSHEET C

NEW SAVINGS BETWEEN 

NOW AND RETIREMENT

Savings Growth Factors for Three Selected Rates of Return

139.741 for 3% 155.282 for 5% 173.085 for 7%

Work-related retirement savings

1

Estimated 

monthly 

savings 

amount

2

Savings 

growth

factor

3

Value of 

savings

in 10 years

(Column 1 x Column 2)

401(k) or 403(b)

Keogh

SEP-IRA

SIMPLE IRA

Other

IRAs (traditional) 

IRAs (Roth)

Other

Home equity

Market value of home

Mortgage and liens (enter as 

positive amount)

Personal savings and investments

Other assets (collections, etc.)

TOTAL ASSETS
16

As an example, if you save $100 a month 

in a workplace 401(k) plan, and if you believe 

that investment will earn 5 percent per year, the 

calculation would look like this:

$100.00 (savings each month) 

 x 155.282 (rate of return factor for 5%)

$15,528.00 (savings in 10 years)

You are making great progress in tracking 

down your retirement assets and solving the first 

half of your retirement mystery. Now move on 

to Worksheet D, Monthly Income Over a 30-Year 

Retirement, to take all of your anticipated assets from 

Worksheets B and C and convert them to a monthly 

income that you can use later to compare with your 

anticipated monthly expenses in retirement. 

In this worksheet, we now add Social Security 

and pension benefits since it deals with income you 

can rely on during retirement. 

You can fill in the box in Column 3 for

Social Security benefits by entering your estimated 

Social Security benefit. You can create a free online 

my Social Security account at www.socialsecurity.

gov/myaccount for immediate access to your 

Social Security Statement to review estimates of 

future retirement benefits. The Social Security 

Administration has resumed periodic mailings of 

paper Social Security Statements. While most workers 

will receive a mailing every 5 years, your Statement is 

available anytime if you set up an online account. 

If you have a fixed pension from work, the

amount for Worksheet D is based on your pay at 

the end of your career. Your employer, union, or 

pension plan administrator can give you details 

about the amount and start date of your pension, and 

whether you will get your pension in a lump sum or 

fixed monthly checks (see discussion in Chapter 5 

describing these options to help you choose). If you 

receive your benefit as a lump sum, put that amount in 

Column 1. If you receive it as a fixed monthly benefit, 

fill in only Column 3.

If you were in a traditional pension plan that

was abandoned for some reason, like your employer 

going out of business, you will still receive some (or 

all) of your pension benefits since these plans are 

federally insured. Information about your plan and 

benefits may be available from the Pension Benefit 

Guaranty Corporation. (See Chapter 6 for PBGC 

contact information.) 

For those assets you tracked down for 

Worksheets B and C, take the totals for each source, 

such as your 401(k) plan, from both worksheets, add 

them together and enter them in Column 1. Select 

an income conversion factor representing the rate 

of return you expect to earn on those assets in the 

future and enter it in Column 2. Multiply Column 

1 by Column 2 and enter the result in Column 3. 

Remember, this calculation is a guesstimate, since 

things that impact your income, such as your tax 

status, will vary. 

When you add up all of the numbers in 

Column 3, you will have a monthly income for the 30 

years of your retirement. This fixed monthly income is 

used to simplify the calculations. Realize that it takes 

into account the continued growth of your assets while 

you are withdrawing money to live on.

Also keep in mind that while the worksheet 

includes your home equity, you may need to live in 

your home for some time or use some of the assets 

from its sale to purchase another home or pay for rent, 

so it may not provide immediate income.

Here is an example of the Worksheet D 

calculation:

$50,000.00 (401(k) account balance)

x 0.005368 (income conversion factor for 5%)

$268.40 (per month)
WORKSHEET D

MONTHLY INCOME OVER 

A 30 -YEAR RETIREMENT

Income Conversion Factors for Assumed Rates of Interest

0.004216 for 3% 0.005368 for 5% 0.006653 for 7%

17

1

Accumulated 

assets

(Column 3

from Worksheet B plus 

Column 3

from Worksheet C)

2

Income 

conversion 

factor

3

Monthly 

income 

beginning at 

retirement

(Column 1 x Column 2)

Social Security

Work-Related Retirement Savings

Pension benefits

401(k) or 403(b)

Keogh

SEP-IRA

SIMPLE IRA

Other

IRAs (traditional) 

IRAs (Roth)

Home equity

Market value of home

Mortgage and liens (enter as 

negative amount)

Personal savings and investments

Other assets (collections, etc.)

TOTAL ASSETS
18

Chapter 3

TRACKING DOWN FUTURE EXPENSES

This chapter will start you on the road 

toward a realistic look at your expenses 

in retirement and how 

they will be affected 

by inflation. These 

numbers are important 

clues to your 

retirement mystery. 

You will be 

looking at your expenses today and 

estimating how they will change over 

time and, specifically, during two other 

time periods: the day you retire 10 years 

from now and over the approximate 30-

year span of your retirement. In doing so,

you will have some idea of whether the money you have saved 

will be enough to last. You will also have a chance to look 

at your spending patterns and decide how they 

could change over time. After all, you can’t control 

inflation over this stretch of time, but you certainly 

can control what you spend.

 Your expenses will likely change 

as you grow older. Early on, you will 

spend less on work-related things like 

transportation and clothing. Maybe 

you’ll spend more on traveling, hobbies, 

or other things you have always wanted 

to do. As you age, it is likely that more of 

your budget will go toward medical expenses, which you will 

read about soon. Retired people may find that recording their 

expenses will alter future spending patterns.

First add up current monthly expenses in Worksheet 

E (Monthly Expenses Today). Then in Worksheet F, 

Monthly Expenses in 10 Years, take those totals and 

adjust them for inflation to estimate your expenses 

during your first year of retirement. Chapter 4 will 

look at those expenses over a 30-year retirement 

and how you will be spending the income you just 

calculated. If you want a quick estimate of how 

much monthly income you’ll need to cover expenses 

in retirement, figure on at least 70 percent of your 

preretirement income. Many experts are now 

increasing that figure to 80 or 90 percent.

ABOUT WORKSHEET E (PAGE 20):

MONTHLY EXPENSES 

TODAY
19

Avoid getting 

stuck on the details 

and giving up because 

you don’t have exact 

records of your 

spending.

If you don’t know 

the exact amount 

you pay for car 

insurance, for example, 

use a guesstimate until you can look it up. 

You can always come back with more accurate 

numbers.

Don’t include things like college tuition

that are one-time costs. If 

monthly bills for one item vary, 

like your heating bill, get a year’s worth, 

add them up, and divide that total by 12 for an 

average monthly expense. If you get a bill four times 

a year, add up a year’s worth and divide by 12 for 

an average monthly cost. Remember to include 

your spouse’s expenses if you’re married and the 

expenses of anyone financially dependent on you. “You will have a 

chance to look at 

spending patterns

and decide how

they could change 

over time.”

Inflation and Your Future

Inflation, in its simplest terms, means that dollar for dollar 

your money will not buy as much next year as it does this 

year. This means inflation is a major factor in determining 

how much money you will need in retirement since, to cover 

inflation’s impact, you will need more money every year. In 

other words, if your money is not earning more than the rate 

of inflation, you will lose part of your nest egg’s buying power.
20 21 You can’t know and can’t 

control future inflation. The only 

accurate inflation rates are from 

the past, and they vary widely. 

In 1980, overall prices went up a 

whopping 13.5 percent; in 2002, 

they went up only 1.6 percent. 

Looking at the past shows how 

rates may vary widely. Worksheet 

F uses the factor for a 3 percent 

rise in prices for the next 10 years. 

But these are estimates, and 

remember, we’ve gotten used to 

low inflation overall—with a few 

glaring exceptions—over the last 

decade.

Facing Down

Rising Costs

One exception to low inflation 

rates is medical costs, which have 

risen faster than inflation over the 

last 20 years. Worksheet F assumes 

a 9 percent rise in medical costs 

each year over the next 10 years 

with costs rising as retirement 

approaches due to inflation and 

an increasing need for medical 

care. If you have, or your family 

history includes, a serious medical 

condition like heart disease, you 

will probably spend more on health 

care than you ever imagined.

According to a recent study, 11 

percent of retiree income will be 

spent on health care now and will 

grow to 19 percent over the next 

25 years.

WORKSHEET E

MONTHLY EXPENSES 

TODAY

21

1

Monthly 

Amount

1

Monthly 

Amount

1

Monthly 

Amount

Housing Loans Health Care (continued)

Mortgage (Including condo fees) 

Rent 

Maintenance

Car

Credit card

Other

Dental

Vision

Noncovered items

Food (at home) Workplace retirement and personal savings Travel/vacations

Utilities Personal Care Entertainment

Electricity

Heat

Internet/cable

Phones

Water/sewer

Hair cut

Dry cleaning

Gym

Other

Eating out

Hobbies

Movies/theater

Charitable contributions

Other

Clothing Transportation Gifts

Membership dues

Taxes Car repairs and maintenance Pet-related costs

Gas

Parking

Public transportation

Real estate

Income (state and federal)

Other property taxes

TOTAL ESTIMATED

MONTHLY EXPENSES

(other than health) Insurance Health Care

House

Life

Car

Disability

Long-term care

Health insurance

Doctor visits

Hospital

Medicine

Over-the-counter medicine

TOTAL ESTIMATED

MONTHLY EXPENSES

(health)
22

 While Medicare is a great benefit to persons 65 If you are thinking about retiring early, consider your 

o

S

s

y

t

c

a

s

d

o

o

Where Will You Live When You Retire? 

Make planning for your future housing needs one of your first 

priorities since where you live in retirement affects not only your 

income, but also your emotional, social, and physical well being. 

It is an important part of your overall retirement strategy. While 

the cost of owning a home hasn’t gone up as much as health 

care, it is high in many regions. Home heating and cooling costs 

are rising fast, too. Maintenance, condo fees, real estate taxes, 

and insurance are other costs affected by inflation.

 As you age, you may want to look into other types of 

housing. Retirement communities providing independent living 

for reasonably healthy older people as well as continuing care 

as needs change over time often require a large down payment, 

say $100,000, and then a monthly fee of $3,000 to $5,000. Saving 

for nursing home care, which in 2012 averaged $248 a day for a 

private room, also might make you feel more financially secure, 

given that at least 40 percent of today’s 65-year-old Americans 

will spend some time in the future in a nursing home.
23

With medical 

and housing costs such a 

big part of a retirement 

budget, it’s no surprise 

that products and 

services have been 

developed to help plan 

for and manage these 

costs. Rising health care costs, in particular, could 

consume all the money saved for retirement. One of the 

products developed is long-term care insurance, which can 

protect retirees’ assets by paying for medical care in a nursing 

home and sometimes in your own home. Premiums vary by the 

features you choose, such as the amount of the daily benefit 

paid and protection against inflation. The average premium 

in 2010 for a 55-to 64-year-old was about $2,300 a year. Buying 

such a policy at a later age 

means higher premiums. If you’re 

considering a policy, get some advice, 

because long-term care insurance has many 

options and some policyholders may find the coverage isn’t 

what they need.

To cope with these future expenses, some 

preretirees are starting special health care savings funds at 

work, separate from their retirement savings. One example is 

a type of account, a health savings account (HSA), which is 

designed to help certain employees save for future qualified 

medical and retiree health expenses on a tax-free basis. 

Essentially, an HSA is a savings account into which you can 

deposit money for future use. If you belong to a health plan 

with a deductible of at least $1,250 (for individual coverage) 

or $2,500 (for family coverage), you may be able to set up an 

HSA. Individuals who don’t belong to a workplace health plan 

can sign up for HSAs with some banks, insurance companies, 

and other approved entities. 

These accounts can receive contributions from you,

your employer, or even a family member on your behalf. You 

can use the funds from an HSA to help offset future medical 

costs, and the money in your account can be carried over 

from year to year. In addition, this type of account is portable; 

it stays with you as you move from one employer to another 

or if you leave the work force. To learn more about health 

savings account criteria, see the Resources section.

“Almost

20 percent of

retiree income

will be spent on

health care.”
24 25

WORKSHEET F

MONTHLY EXPENSES IN 10 YEARS 

(First year of retirement)

1

Total monthly expenses 

now (from monthly 

expenses column in 

Worksheet E )

2

10-year inflation factor

of 1.3439 (3%)

(except for health care)

3

Total expenses in 10

years adjusted for 

inflation (Columns 1x2)

Housing

Mortgage (Including condo fees) 

Rent

Maintenance

Food (at home)

Utilities

Electricity

Heat

Internet/cable

Phones

Water/sewer

Clothing

Taxes

Real estate

Income (state and federal)

Other property taxes

Insurance

House

Life

Car

Disability

Long-term care

25

1

Total monthly expenses 

now (from monthly 

expenses column in 

Worksheet E )

2

10-year inflation factor

of 1.3439 (3%)

(except for health care)

3

Total expenses in 10

years adjusted for 

inflation (Columns 1x2)

Loans

Car

Credit card

Other

Workplace retirement and personal savings

Personal Care

Hair cut

Dry cleaning

Gym

Other

Transportation

Car repairs and maintenance

Gas

Parking

Public transportation

Health Care

Health insurance

Medicare Part B

Medicare Part D

Medicare Part C

Medigap

Doctor visits

Hospital

Medicine

Over-the-counter medicine

For a 9% inflation factor, use 2.3674
26

WORKSHEET F CONTINUED

MONTHLY EXPENSES IN 10 YEARS 

(First year of retirement)

1

Total monthly expenses 

now (from monthly 

expenses column in 

Worksheet E )

2

10-year inflation factor

of 1.3439 (3%)

(except for health care)

3

Total expenses in 10

years adjusted for 

inflation (Columns 1x2)

Health Care (continued)

Dental

Vision

Noncovered items

Travel/vacations

Entertainment

Eating out

Hobbies

Movies/theater

Charitable contributions

Other

Gifts

Membership dues

Pet-related costs

TOTAL MONTHLY EXPENSES 

ADJUSTED FOR 10 YEARS

INFLATION (other than health)

TOTAL MONTHLY EXPENSES 

ADJUSTED FOR 10 YEARS

INFLATION (health)
27

ABOUT WORKSHEET F (PAGE 24): 

MONTHLY EXPENSES IN

10 YEARS

This worksheet will show you how inflation can 

increase your total expenses in your first year of 

retirement.

You will notice that Worksheet F has room 

for some new types of health-related expenses many 

retirees are likely to incur in retirement.

Here is an example of the calculations you will

do in Worksheet F:

$200.00 (amount spent on food each month today)

x 1.3439 (inflation factor of 3%)

 $268.78 (cost of the same food basket in 10 years)

Note that for many mortgages and some loans, 

your payments have taken into account the rate 

of inflation. If you have a fixed mortgage or loan, 

you will not need to do the calculation for this item. 

However, your mortgage expenses may change 

after retirement if you decide to sell your home and 

purchase something smaller or move to a region with 

lower housing costs.

The worksheets in this booklet don’t account 

for savings during retirement in order to simplify 

the calculations. However, you may find or put aside 

additional savings in retirement. For example, since 

your home mortgage will be paid at some point, this 

may be one place where money will be freed up. 

You may want to use that money (or other funds) as 

savings during retirement, whether to add to your 

nest egg for unexpected retirement emergencies or 

to plan for inflated expenses later in your retirement. 

But remember, it is easier to save now than it will be 

in retirement.

“If you want

a quick estimate, 

figure on at least

80-90 percent of your 

preretirement

income to cover 

expenses.”
28

Chapter 4

COMPARING INCOME AND EXPENSES

Join the Club 

Now you will compare your 

income with your expenses 

during retirement and see if 

they match up. This is the 

number you’ve been working 

toward as you’ve investigated 

your assets and income, 

then expenses, and finally, 

figured the effects of time on your money. 

By the end of Chapter 4, you will discover 

whether you need to save more for 

retirement and, if so, how much more...

and you will learn how to grow your 

savings over time. 

Few people will have exactly 

the amount of money they will need in 

retirement. Most will get a negative figure 

– a gap – when they do the math. If this is 

your situation, this chapter can help you

figure how much more to save each month over the 

next 10 years until you retire. After you come up 

with your totals, be sure to read on to find out the 

difference a year can make and the five ways 

to close the gap and boost your savings. Where 

will you find additional savings? Here are some 

suggestions for active workers and retirees 

alike.

 You probably know by now the easiest 

way to watch your nest egg grow is to 

make the maximum contribution to your 

workplace savings plan through payroll 

deductions. If you are 50 or over, you will have the chance to 

add even more to your savings through catch-up contributions, 

ranging from $1,000 to $5,500, depending on the type of 

retirement plan you have. And you are reducing your taxes. 

If there’s no retirement plan at work, you can add annual 

contributions to any IRA accounts you have.

Most people haven’t thought about how long their savings

will last in retirement or how much inflation will increase

over time.

Worksheet G is where all your prior work comes 

together. Building on the clues uncovered in the earlier 

worksheets, Worksheet G compares your anticipated income 

and expenses over the 30 years of your retirement. Making the 

comparison in dollars valued at the time of your retirement, this 

worksheet takes into account that while you will have a fixed 

monthly income, your expenses will increase due to inflation.

At the beginning of retirement, most people’s

monthly income likely will exceed their expenses; but after

a decade or so, expenses begin to exceed the monthly income.

Realizing this now will allow you to save and invest any

extra income in the early years of retirement so that it will 

grow and can be used to cover increased expenses later in 
29

retirement. Especially if 

you have a shortfall, this 

worksheet will allow you 

to see how much you 

may need to add to your 

savings. When doing 

this comparison of 

your projected income 

and expenses, keep in mind that the value of a dollar 

tomorrow is less than a dollar today. The goal is to stay 

ahead of inflation. For example, a dollar today is worth more 

than a dollar in 30 years if the rate of return, say 5 percent, is 

greater than the inflation rate, say 3 percent. The worksheet 

addresses the impact of 

inflation by converting your

anticipated cash flows into a constant 

dollar value at the time of your retirement.

 ABOUT WORKSHEET G (PAGE 30): 

COMPARING PROJECTED 

INCOME AND EXPENSES

Start Worksheet G by taking the total monthly income 

calculated in Worksheet D and multiply it by a value 

adjustment factor you select from Clue 3 (page 32). 

Select the rate of return with a 0 percent inflation 

rate. Then multiply this result by 360 – the number of 

months in a 30-year retirement. Enter that amount in 

Column 4 of Worksheet G.

“Few people

will have exactly

the amount of

money they will

need in

retirement.”
30 31

WORKSHEET G

COMPARING PROJECTED INCOME 

AND EXPENSESARE YOU PREPARED?

1

At retirement

2

Inflation adjusted value factor

(see Clue 3)

3

Value at

retirement for one month

(Column 1 x Column 2)

4

Total value

at retirement

(Column 3 x 360 months)

Total projected income

 Worksheet D, col 3 total, 

 page 17

Total projected expenses

 Worksheet F, col 3 total, 

 page 26

 Health

 Other than health

Projected value of income less

expenses

 Subtract line 2 from line 1 

Next move on to expenses in row 2, taking the 

total monthly expenses calculated in Worksheet F. For 

expenses other than health, go to Clue 3 (page 32) to 

select an inflation adjustment value factor: Use the 3 

percent inflation rate (used in Worksheet F) or select 

another that you believe will reflect inflation over the 

30 years of your retirement. For health, use an inflation 

rate less than 9 percent (the rate used in Worksheet 

F) over retirement. By retirement age, your annual 

medical costs will have already increased a lot so future 

increases will be smaller. Multiply this result by 360 

and enter it in column 4. Subtract the total value of 

projected expenses (“other than health” and “health”) 

over 30 years of retirement in Column 4 from the 

corresponding total value of your projected income 

(Column 4). Here is an example of how this works: 

Projected value of income:

 $1,400.00/month 

 x 0.5174 (5% rate of return, 0% inflation)

 x 360 (months in 30 years) 

 $260,769.60

For this example, we are using a 7 percent 

inflation rate for health expenses and 3 percent 

for other than health expenses:

Projected value of expenses:

Health expenses 

$200.00 /month

x 1.3691(5% rate of return, 7% inflation) 

x 360 (months in 30 years)

$98,575.20 

Total projected value of expenses:

$288,079.20 

 $260,769.60 (value of income over 30 years)

- $288,079.20 (value of expenses over 30 years)

- $ 27,309.60 (shortfall)

 Other than health expenses

 $700.00 /month

 x 0.7520 (5% rate of return, 3% inflation) 

x 360 (months in 30 years)

$189,504.00 

“As you set

aside more money,

the combination

of savings and

earnings will help

close the gap.”
32

CLUE 3

Value Adjustment Factors

INFLATION RATE ASSUMED RATE OF RETURN

3% 5% 7%

0%

0.6589 0.5174 0.4175

1%

0.7517 0.5821 0.4636

2%

0.8638 0.6593 0.5179

3%

1.0000 0.7520 0.5825

3.5%

1.0789 0.8054 0.6194

4%

1.1661 0.8640 0.6597

5%

1.3698 1.0000 0.7524

6%

1.6207 1.1658 0.8642

7%

1.9309 1.3691 1.0000

8%

2.3161 1.6193 1.1655

9%

2.7962 1.9286 1.3683

10%

3.3968 2.3125 1.6179

If the result is negative, don’t worry. Just about 

everyone will need to make up a shortfall in savings. 

Remember, also, that it is difficult to project inflation 

rates, especially for health care, that far in the future. 

It is better, however, to have a rough idea of where 

you stand than have no guesstimate at all. 

The good news is that time is on your side.

Remember the effect of interest compounding and 

how it can work to make your money grow in 10 

years. Each year, as you set aside more money, the 

combination of savings and earnings will help close 

the gap. Worksheet H lets you figure out how much 

you need to start to save today to make up the gap 

between projected income and expenses. Multiply the

gap from Worksheet G by an additional savings factor 

you select from the top of Worksheet H, based on the 

rate of return you think you will earn.

For example:

$27,309.60 (gap from Worksheet G example above)

x 0.00644 (5% rate return)

$175.87 /month to close the gap

Socking away that amount of money over the

next 10 years, while getting a rate of return you’re 

comfortable with, should go a long way toward 

matching up income and expenses over 30 years of 

retirement. 

The good news is that you don’t have to save

the total amount of any gap between what you have 

and what you need. Each year the amount you invest 

will grow, and the growth of your savings lessens the 

amount you need to save. 
33

WORKSHEET H

ADDITIONAL SAVINGS

NEEDED BEFORE RETIREMENT

(IN 10 YEARS)

Additional savings factors: 

0.00716 for 3% 0.00644 for 5% 0.00578 for 7% 

Gap between projected total value of expenses 

and projected total value of income 

 (from Worksheet G) 

1 $

Additional savings factor 2

Additional monthly savings needed 

 (multiply line 1 x line 2) 3 $

 

Five Ways to Close the Gap

Where will you find additional savings? Here are some 

suggestions for active workers and retirees alike.

Number 1 - Work your contributions at work

Without exception, retirement planners advise contributing the 

maximum to your retirement plan, especially if your employer 

contributes, too. If your contributions are made by salary 

deduction, saving is easier to do and may seem almost painless. 

And contributing more means postponing, or “deferring,” taxes 

until you withdraw the money at retirement. Then you may be 

in a lower tax bracket.

Catch-up provisions for some retirement plans allow 

you to contribute extra amounts if you’re over 50. Information 

about 401(k) catch-up contributions is available from your 

retirement plan administrator or on the Internet. If your plan has 

a catch-up provision, act on it now.

Number 2 - Work longer, retire later

Staying employed as long as possible benefits your retirement 

finances in several ways. Having an income gives your retirement 

savings more time to grow. A regular income could mean more 

regular savings. If you work for a company that provides health 

insurance, you won’t have to fully pay for a policy yourself.

You don’t have to stay at your same job if there are other 

opportunities. Maybe you want a new career, one that ties in to 

your personal interests. Longer life spans and better health mean 

many older people have the energy and enthusiasm employers 
34

Saving: A Little Goes A Long Way

CLUE 4

EXTRAS TO CONSIDER DOING WITHOUT MONTHLY

COST 

SAVINGS OVER 10 YEARS AT

A 5% RATE OF RETURN WITH

ALL EARNINGS REINVESTED

Weekly dinner for two @ $50 $200 $31,056

Premium cable TV subscription $80 $12,423

Movie and popcorn for two @ $32 

twice a month

$64 $9,938

Daily lottery ticket

$30 $4,658

are looking for, not to mention the skills and experience. Many 

people find the social benefits of working as important as the 

financial ones.

Number 3 - Cut expenses, big and little

Moving to a region with lower housing and living costs or 

moving to a smaller home can help narrow the savings gap. 

Another option is staying in your community but downsizing 

to a smaller place like a condo or apartment. The same factors 

that drove up the value of your current house, however, will 

also have driven up overall housing costs, including real estate 

taxes. Housing is a major part of everyone’s budget so think 

carefully about where you want to be and whether you can 

afford it. Keep in mind, however, that moving includes its 

own financial expenses and means leaving friends and your 

community.

Financial planners say that preretirement years are 

the wrong time to take on large debts, including home equity 

loans and high interest credit card debt. Buying a new car, 

boat, or vacation home is not wise if you need to save. Investing 

that $400 a month (an average 5-year car loan payment) and 

getting a 5 percent return would put more than $27,000 in your 

retirement account. Consider keeping your old car or buying a 

used one.

Preretirement is also the wrong time to give or “loan” 

large sums of money to your children and grandchildren. Their 

earning power is usually far better than yours. Now is the time 

to take care of your finances so you don’t have to ask others to 

bear the financial burden for your care later on.

Number 4 - Social Security, now or later?

The amount of your monthly Social Security benefit goes up 

the older you are when you start receiving it. For example, a 

61-year-old man earning $60,000 in 2014 and eligible for his 

early Social Security benefit at 62 would receive an additional 

$1,200 a year by waiting 1 year, until he is 63, to collect his 

benefits. On the other hand, retirees who are seriously ill, 

who need the money immediately, or who feel comfortable 

investing their monthly checks may choose not to wait.

In this example, the worker turning 62 in 2014 would 

have a full retirement age of 66 under Social Security. At full 

retirement, his benefit will be $1,660. If, however, he starts to 
35

receive benefits at age 62, his monthly benefit would be reduced 

to $1,173. By waiting until age 70, his monthly benefit would be 

$2,291.

On average, early retirement will give you about the 

same total Social Security benefits over your lifetime, but in 

smaller amounts to take into account the longer period you will be 

receiving them.

If you delay retirement beyond the full Social Security 

retirement age, you can earn retirement credits, increasing Social 

Security by a certain percentage (depending on date of birth) 

until you reach age 70.

Regardless of the age you start receiving Social Security 

benefits, remember to sign up for Medicare at age 65. If you 

don’t (for example, because you have other coverage), you may 

be limited on when you can enroll later and may pay more in 

premiums. For more information, see the Resources section. 

Number 5 - Put your money where the returns are

Educate yourself about investing and consider paying a 

professional to help you choose the right place for your 

money. Financial experts say too many people keep too 

much money in the wrong kinds of accounts, for example 

checking accounts, savings accounts, and money market 

funds, which typically have low interest or return rates. 

Review the discussion in Chapter 2 about asset allocation and 

diversification of investments. 

Adding $200 a month, or $2,400 a year over 10 

years, to a starting retirement savings balance of 

$40,000 would more than double your money, 

assuming a 5 percent rate of return and all 

earnings reinvested.

Closing The Gap With $200/Month Additional Savings At 5% Per Year Over 10 Years

CLUE 5

YEAR START ADD RATE YEAR END

1 $40,000.00 $200/month 0.05 $44,512.50

2 $44,512.50 $200/month 0.05 $49,255.80

3 $49,255.80 $200/month 0.05 $54,241.90

4 $54,241.90 $200/month 0.05 $59,483.00

5 $59,483.00 $200/month 0.05 $64,992.30

6 $64,992.30 $200/month 0.05 $70,783.40

7 $70,783.40 $200/month 0.05 $76,870.80

8 $76,870.80 $200/month 0.05 $83,269.70

9 $83,269.70 $200/month 0.05 $89,995.90

10 $89,995.90 $200/month 0.05 $97,066.20

35
36

Chapter 5

MAKING YOUR MONEY LAST

The point of all the calculations 

you have done in this booklet is to 

make sure your income will last a 

lifetime. If doing the worksheets 

has uncovered a gap between your 

retirement income and expenses, 

you probably will be changing 

some financial habits over the next 

10 years. The only part of your 

retirement mystery that remains is 

deciding how you are going to make your 

retirement income last as long as you do. 

You will need a strategy. 

Solving your retirement mystery 

has revealed that more saving 

(especially for medical costs), more 

investing, and less spending will boost your confidence

and your financial bottom line as you near the end of your 

working life.

For now, you will probably need to focus on 

adding to your nest egg and investing it wisely. Take 

into account that you will also have income taxes 

to pay. Take the short tax quiz in this chapter 

to find out about minimizing your taxes in 

retirement.

You may also want to take a look at 

financial products and services that could 

help build some financial security into your 

retirement. But first, a word of caution. 

Because you’re growing a nest egg, you may 

start hearing from people offering their own 

strategies for managing your retirement money. These people 

may be relatives and friends. You will also hear from strangers 

in phone calls, letters, and emails. Some may offer to double 

your money at no risk. Think long and hard about involving 

them in your financial affairs, unless they’re qualified financial 

professionals and can be objective. Retirees are frequently 

targets for scams. Don’t give out any personal information 

to strangers. Don’t be a courtesy victim. Con artists will not 

hesitate to exploit your good manners. Save courtesy for friends 

and family members, not potential swindlers!

It’s A Big Deal

“Having a strategy” may sound like retirement is a battle or a 

complicated business opportunity. You may be thinking, “What’s 

the big deal? I’ll just withdraw money when I need to pay 

bills.” Your parents may have done fine by simply cashing their 

monthly Social Security and pension checks to live on. Their 
37

taxes on this income most 

likely were a lot simpler and 

a lot easier to do.

In today’s 

world, keep in mind 

that the money you have 

saved and invested will 

be earning income until 

you withdraw it. Part of solving your 

retirement mystery will be deciding how to handle your 

retirement money, including continual investing, throughout 

your lifetime. Your tax situation, both federal and state, may 

not be so clear. You need to plan a withdrawal strategy so you 

pay less tax on 

money you take out of your 

retirement account and continue to 

grow the money you leave in. A qualified tax 

adviser can help here. 

“Part of solving

your retirement 

mystery is deciding 

how to handle

your retirement 

money.”

Getting Your Retirement Benefits

You may need to decide whether to take your pension 

or your retirement plan benefit in a lump sum or in an 

annuity. You can find out about your retirement plan 

payout options by reading your plan documents. Or you 

can contact the plan administrator directly for information 

about what your plan offers.

If you are in a traditional pension plan, your 

benefit is paid in the form of an annuity – that is, through 

periodic payments, typically monthly, for an extended 

period, usually your lifetime. If you select an option that 

provides for a survivor benefit for your spouse, note that 

your monthly benefit will be reduced. The survivor benefit 

is typically 50 percent of the retiree’s benefit, but some 

plans provide for other options, such as 75 percent. 
38

If you are in a 

defined contribution plan, 

such as a 401(k) plan, you 

do not automatically get your 

benefit as an annuity. Your 

retirement benefit can be taken 

as a lump sum paid entirely at 

the time of your retirement or, as 

in some plans, through periodic payments over a short period 

of time, such as 3 or 5 years. Your plan may provide an annuity 

option or you may choose to buy an annuity with all or part of 

your lump sum benefit. If you choose to take your benefit in a 

lump sum, be sure to put it in a tax-deferred account, such as 

an IRA, within 60 days to avoid paying high income taxes (the 

highest tax being 39.6 percent as of 2014) on the amount. You 

will then have to decide how to invest what could be the most 

money you’ve ever accumulated and make sure it lasts for the 

30 years of your retirement.

If you choose an annuity, make sure you realize the 

risks and rewards. An annuity provides a steady stream of 

income that lasts throughout your lifetime and can provide 

adjustments for inflation. This is helpful especially in the 

early years of retirement when there may be the temptation 

to spend the excess income instead of saving it to make 

sure it is there in 20 to 30 years. Keep in mind that if you die 

sooner than expected, however, the insurance company may 

keep the remaining 

balance unless you have 

opted for a survivor 

benefit. That is why 

annuities are usually 

not recommended 

for those with a 

shortened life span. Annuities come in many varieties. If you 

are purchasing one, choose an insurance company with a good 

credit rating and track record. Be sure you know what you’re 

buying – there are costs involved in ending the contract. The 

more you learn upfront, the better. 

You can also buy an annuity with money from other 

assets such as an inheritance or the sale of your house. Like 

other annuities, you will receive a monthly check for a defined 

period or for life. The tax treatment of these payouts will be 

different, however. Like any investment, review the terms of the 

annuity before you purchase it. For example, will the amount 

paid vary based on investment returns or is it fixed, what will 

you pay in related fees, etc.

Another way to make your money last is to obtain a 

reverse mortgage – essentially a bank loan based on the amount 

of the equity in your home. It can provide you with a monthly 

check, but at a cost. You are spending down the value of your 

home. If you can keep your house in good repair so the bank 

sees value in the loan, this is a way to supplement your income 

and not have to leave your home. When you or your heirs sell the 

house, however, the loan has to be repaid. Talk with the bank 

about any taxes due on these payments, and make your family 

aware of your reverse mortgage.
39

Also, remember longterm care insurance can help 

you plan for increased health 

care costs in your later years.

Withdrawals:

Which Pot?

You probably have some personal 

savings included in your retirement nest egg that you’ve already 

paid taxes on. A Roth IRA, for example, is a good place to leave 

money you’ve invested for growth because the withdrawals are 

not taxed. Retirement experts say you usually should withdraw 

from this pot of money earlier in retirement when you may be 

in a higher income tax 

bracket. Withdraw your 

taxable retirement 

plan money (such as 

your 401(k) or other 

workplace savings 

plan) later, when you 

have less taxable income and possibly higher deductions due to 

medical expenses. 

 Be aware, however, that the IRS requires you to start 

withdrawing tax-deferred money from retirement accounts 

when you turn 70 1⁄2 years of age. (This is a milestone on the 

Retirement Timeline at the beginning of this booklet.) By 

doing so, you will avoid tax penalties. These withdrawals are 

called “required minimum distributions,” and the formula for 

determining the amount can be complicated. You may want to 

consult a tax expert for help. 

Can You Beat It?

As you’re withdrawing money to pay your bills in retirement, you 

should be trying to grow your remaining money to at least keep 

up with inflation. Of course, it’s better to beat inflation. Experts 

say you need to continue investing and diversifying your assets 

throughout your life. Keeping your money in accounts paying 

guaranteed interest rates will keep it safe, but not from inflation. 

Inflation is a major threat to your financial future, so make it a 

consideration in your investment decisions. 

“Experts say you

need to continue 

investing and 

diversifying your 

assets throughout 

your life.”
40

Going It Alone 

Vs.

Getting Help

With a lot of study and 

regular attention to 

changes in tax laws, the 

economy, the stock market, 

and your money, you may be able to come up with a strategy 

to minimize taxes and maximize income. There’s even 

software to help. 

There’s another road, too. You can hire someone 

to develop your strategy and manage your money for you. 

Especially during the later years of your retirement, you 

may want to seek the help of a professional, when you may 

have less interest, energy, and ability to keep your strategy 

on target. 

Good financial professionals, and the companies

they work for and with, are required by law to be clear 

and open about their fees and charges and whether 

they are paid by commissions or for the sales of financial 

products, such as annuities and mutual funds. Be sure 

to ask questions, get references, and avoid anyone who 

guarantees performance on returns. This way you can 

make an informed decision. After all, it is your money you 

are putting in their hands. See the Resources section for 

more information on getting help.

Taxes & 

Retirement–

True or False?

Income taxes go away 

when you’re retired. 

True or False?

False. Remember all that pretax money you 

contributed to your retirement plan? When you withdraw it 

at retirement, you pay income taxes.

Social Security benefits are not sheltered from taxes. True or 

False?

True. A portion of your Social Security benefits is included 

in your taxable income if, for example, in 2014 you have 

taxable income and Social Security benefits of more than 

$25,000 for a single person and $32,000 for a couple.

There are no tax consequences if you don’t start to withdraw 

your pretax savings at age 70 1⁄2. True or False? 

False. There is a 50 percent tax penalty on amounts that the 

IRS requires to be taken out after age 70 1⁄2 and that are not 

withdrawn when required. In tax terms, these are called 

“required minimum distributions.”

A Few Words About Scams

As you plan your retirement, don’t let fear, desperation, or the 

need to catch up financially push you into any hasty investment 

decisions. In all legitimate investments, higher returns are 

accompanied by higher risks – risks you may well not want to 

take as you near retirement. Be wary of anyone who claims they 

can sell you a product that offers great reward without great risk 

-- a sure sign of a scam. Here are a few points to keep in mind 

when you make any financial decision:
41

Recognize that anyone can claim to be a “financial consultant” 

or “investment counselor.” That person may not have the 

special training, expertise, or credentials necessary to back 

up the claim, however. Ask about licensing and professional 

designations and check them out with securities regulators and 

any trade groups in which they claim membership.

Understand your investments and never be afraid to ask 

questions. Good financial professionals are never pushy, and 

they never dismiss your concerns.

Don’t let embarrassment or fear keep you from reporting 

suspected investment fraud or abuse. Contact the securities 

agency in your state as soon as you suspect a problem or believe 

you have been dealt with unfairly. 

Never judge a person’s integrity by how they sound or how 

they appear. The most successful con artists sound extremely 

professional and have the ability to make even the flimsiest 

investment seem as safe as putting money in the bank.

Monitor your investments. Ask tough questions and insist 

on speedy and satisfactory answers. Make sure you get 

regular written and oral reports. Look for signs of excessive 

or unauthorized trading of your funds when you receive 

statements, and do not be swayed by assurances that this kind 

of practice is routine.

 Above all, become an informed investor. In investing, 

as in life, if it sounds too good to be true, it probably is.

 Now that you have tracked down all the clues 

pertinent to your retirement mystery, you’ve almost solved the 

case. In the next chapter, you will find several resources to 

turn to for more information. Take advantage of them. 

“Be sure to ask 

questions, get 

references, and

avoid anyone 

who guarantees 

performance on 

returns.”
42

Chapter 6

TRACKING DOWN HELP FOR RETIREMENT

Like a black and white TV, retirement 

used to have high contrast and few 

choices: One day you were 

working and the next day 

you weren’t. One day you 

lived on a paycheck and 

the next day on pension 

and Social Security 

checks. Your income was fixed 

and retirement was no mystery. 

You have the power to put some 

color, maybe even gold, in your

retirement. It mostly means putting

into action a plan to close the income-expense gap and manage 

your money smartly now and during your later years. You won’t 

be alone. In the next 25 years, one in five Americans will be 

over 65. That’s a lot of people today who will need 

to work on a clear and realistic retirement plan 

during the next 10 years. Make sure you’re one 

of them so your retirement wishes come true.

 In the following list of

resources, you will find ways to 

discover more clues about retiring 

gradually and maybe working 

longer, paying attention to your assets 

and income, saving and investing, planning for 

increased expenses, including medical costs, and developing a 

withdrawal strategy. The information available on the Websites 

listed is rich in detail and wide in scope. But remember to 

protect your privacy by not giving out personal information, 

such as your Social Security number, telephone, or address, 

unless you know whom you’re dealing with.

In fact, helping America’s workers succeed in a new 

kind of retirement has become the focus for a number of 

government agencies and organizations. Businesses selling 

products and services like annuities, long-term care insurance, 

and income management services are another source of 

information. To reach all these sources, use the Internet, your 

telephone, and the public library. 

Periodically look back over the worksheets you have

done and fill them out again as your finances change. Chart 

your progress through the next 10 years until retirement ... and 

beyond. Get time on your side and get going.
43

RESOURCES

This publication is presented by: 

U.S. Department of Labor

Employee Benefits Security Administration 

200 Constitution Ave., N.W., Washington, DC 20210

Website: dol.gov/ebsa 

Toll-free publication request line: 1-866-444-3272

North American Securities Administrators Association, Inc.

750 First St., N.E., Suite 1140, Washington, DC 20002

Website:www.nasaa.org 

(202) 737-0900

The Actuarial Foundation 

475 North Martingale Rd., #600, Schaumburg, IL 60173

Website: actuarialfoundation.org

(847) 706-3535

The following Websites, booklets, pamphlets, and other 

references are available from the organizations above and 

others that focus on retirement and savings issues. 

Retirement 

Savings Calculators: 

(Note: The Department of Labor does not 

endorse one specific Website over another.)

www.aarp.org/retirementcalculator

money.cnn.com/calculator/retirement/retirement-need

www.kiplinger.com/fronts/archive/tool/index.html

choosetosave.org/calculators

wiserwomen.org

(special site for women and retirement)

Retirement Planning and General Retirement Issues: 

dol.gov/ebsa

Savings Fitness ... A Guide to Your Money and Your 

Financial Future

Top 10 Ways to Prepare for Retirement

Women and Retirement Savings

Filing a Claim for Your Retirement Benefits

What You Should Know About Your Retirement Plan

Retirement Toolkit

Request copies by calling 1-866-444-3272

www.socialsecurity.gov

The Social Security Administration Website has online 

resources to help calculate your retirement benefits, and to 

learn about survivor benefits and Medicare. Two publications 

you may want to view or order:

Understanding the Benefits 

What Every Woman Should Know

“Chart your

progress through

the next

10 years until 

retirement.”
44

www.aarp.org/work/retirement-planning

AARP offers a wealth of information,

including a fact sheet on reverse mortgages 

and a retirement income calculator.

Phone: 1-888-OUR-AARP (687-2277)

pbgc.gov 

For those employees who may have worked 

for a company with a traditional defined benefit 

(DB) pension, the Pension Benefit Guaranty 

Corporation can assist in locating any money still in 

your account. Those with DB plans will also find 

these two booklets useful:

Your Guaranteed Pension

Finding a Lost Pension

Phone: 1-800-400-7242

www.nefe.org

Browse the Website of the National Endowment for Financial 

Education (and especially the “Retirement Planning” section) 

for a wealth of preretirement information. Also view the 

following publication at SmartAboutMoney.org: 

Guidebook to Help Late Savers Prepare for Retirement 

Saving and Investing: 

consumerfed.org 

In addition to consumer fact sheets and studies, the Consumer 

Federation of America’s Website offers a free savings brochure, 

6 Steps to Six-Figure Savings.

Phone: (202)387-6121 

www.sec.gov

The Securities and Exchange Commission Website offers

a menu of online “Investor Information” topics for consumer 

reference. View Invest Wisely and dozens of other titles. 

www.mymoney.gov

This Website is sponsored by the Financial Literacy 

and Education Commission, U.S. Department 

of the Treasury, and has among its offerings the

MyMoney ToolKit. You can order a copy online. 

irs.gov/pub/irs-pdf/p590.pdf

The Internal Revenue Service’s Individual 

Retirement Arrangements (IRAs) is one of several 

guides to retirement plans that the agency offers. 

publications.usa.gov

The Federal Citizen Information Center Website 

is your portal to government information from car 

insurance to retirement savings. You can also order a free copy 

of the Consumer Information Catalog at this site. 

www.360financialliteracy.org

This site, sponsored by the American Institute of Certified 

Public Accountants, views finances throughout life – from 

childhood to college, career, and retirement and estate 

planning. 

Getting Help: 

www.nasaa.org/investor-education/

This site alerts readers to the latest money scams and to 

any disciplinary rulings against individual financial advisers. 

The Website also includes a section on investor education, 

including this publication:

Protecting Your Money: Avoiding Frauds and Scams.

www.LetsMakeAPlan.org 

The Certified Financial Planner Board of Standards Website 

lets you look up a certified financial planner near you. The 

organization also distributes a free “Financial Planning 

Resource Kit.” 

Phone: 1-800-487-1497

napfa.org

This is the site for the National Association of Personal 

Financial Advisors, an organization of fee-only comprehensive 

financial professionals. The Website also includes retirement 

planning information. 

Phone: 1-888-FEE-ONLY (333-6659)
45

actuarial

foundation.org

View the following 

publications on this site.

Seven Life-Defining 

Financial Decisions

Making Your Money 

Last for a Lifetime: Why 

You Need to Know About 

Annuities

www.soa.org

The Society of Actuaries Website (see “News and 

Publications”) links to informative articles in the group’s 

publication, The Actuary Magazine.

www.consumer.ftc.gov

The Federal Trade Commission’s 

site includes over two dozen fact sheets 

and brochures warning consumers about 

scam investments. View Reverse Mortgages and others. 

www.acl.gov/Get_Help/Help_Older_Adults/index.aspx

Topics from money to housing are included at this 

Administration for Community Living “Older Adults” site.

medicare.gov

The Centers for Medicare and Medicaid Services

(U.S. Department of Health and Human Services or HHS) 

site is your first and most reliable resource for information 

on Medicare. It includes information on enrollment, billing, 

appeals, long-term care, and links to information on the 

prescription drug program. Start with these publications:

Medicare & You

Choosing a Medigap Policy: A Guide to Health Insurance

for People with Medicare

Your Guide to Medicare Prescription Drug Coverage

www.socialsecurity.gov/medicare/prescriptionhelp/

The Social Security Administration also has information on 

the Medicare Prescription Drug Program.

healthcare.gov

Use this Website to apply for health coverage in the Health

Insurance Marketplace, compare plans, and enroll online.

longtermcare.gov

National clearinghouse for long-term care information from 

HHS.

“Get time

on your side

and

get going.”
46 47 WORKSHEETS FOR THE FUTURE

You have seen 

the following

worksheets 

before. They appear

on some of the preceding pages. 

This additional collection will prove 

useful: It will help you redo some or all of your 

calculations from time to time. If you get a raise and add it to your 

savings, that’s an ideal time to update 

Worksheet A. Its abbreviated instructions will provide 

an extra level of understanding. Do you plan to pay off a mortgage 

between now and retirement? This will 

also affect your worksheet calculations. And each time you add more to savings, 

you close any gap between the money 

you have and the money you will need 

for retirement. (Worksheet H) Saving copies of all the worksheets will 

clarify the progress you are making 

toward your retirement goals. 

These lighter colored versions will 

also make it easier to make extra copies 

as needed. So if you anticipate

needing more than one 

extra set, 

why not make it now? 

 And don’t forget to use your trusty 

number 2 pencil. Remember, the reward 

for completing this information should 

be a happy retirement future rather than 

a beautifully drafted plan. Done well, it 

will be as considered and accurate as it 

is erased and dog-eared. Accomplishing 

such a goal will require that each mystery 

be solved a clue at a time.

 If all this sounds a little daunting, 

please don’t forget our generous time 

frame – 10 years if we start now. Even 

devoting just one hour a month 

will allow more than enough 

attention to develop your 

successful strategy. 
48

INSTRUCTIONS FOR WORKSHEET A

TODAY’S MONEY

Worksheet A lets you shine some light on the money 

you will have to support yourself (and your spouse, if 

you have one) in retirement. 

Write down in this worksheet only the money 

you have today that you plan to use when you retire.

Include the balance on your 401(k) plan, “Keogh,” 

SEP-IRA, and SIMPLE plans in the spaces provided.

The next rows include savings in IRAs (both 

traditional and Roth), savings accounts in a bank, 

and the market value of your home.

Enter mortgage and other liens as a negative 

amount, then go on to add any other personal savings 

and investments you have, including the cash value 

of life insurance and any valuable collections you 

may have. 

Don’t add balances from your Social Security 

statements and from a traditional pension plan, if 

you have one – save that for Worksheet D.

INSTRUCTIONS FOR WORKSHEET B

YOUR MONEY10 YEARS FROM TODAY 

This worksheet takes the total from Worksheet A and 

projects it into the future – specifically, to the day 

you retire. How much money will you have? 

By choosing a savings growth factor for a 3, 5, 

or 7 percent rate of return, you can take current 

retirement saving sources and project earnings

on each of them during the next 10 years. You 

will be able to transfer the dollar amounts for your 

income sources directly from Column 3 of Worksheet 

A. Multiply that number by the savings growth factor 

you choose and enter the new number in Column 3. 

Like Worksheet A, Social Security benefits 

and traditional pensions are not included since 

you won’t receive these sources of income until 

retirement. 

INSTRUCTIONS FOR WORKSHEET C

NEW SAVINGS BETWEEN

NOW AND RETIREMENT 

You may well have additional workplace and 

personal savings to add to your earnings between 

now and retirement. Worksheet C lets you calculate 

potential growth using a savings growth factor 

representing 3, 5, or 7 percent rates of return, 

depending on how much you believe each of the 

worksheet items will increase in value between now 

and the day you retire in 10 years. 

To get 10-year totals, multiply the amount 

you believe you will add monthly to IRAs, 401(k)s 

and other savings instruments by the growth factor 

you select. The result: the value of your new savings 

in 10 years. 
49

WORKSHEET A

TODAY’S MONEY

Instructions: Record amounts for yourself and for your spouse in columns 1 and 2. Add up the 

money across each row for you and your spouse and write the total in column 3. Then add all the 

numbers down column 3 and write the total in column 3 at the bottom.

Work-related retirement savings

1

You

2

Spouse

3

Total

401(k) or 403(b)

Keogh

SEP-IRA

SIMPLE IRA

Other

IRAs (traditional) 

IRAs (Roth)

Other

Home equity

Market value of home

Mortgage and liens (enter as negative amount)

Personal savings and investments

Other assets (collections, etc.)

TOTAL ASSETS
50

WORKSHEET B

YOUR MONEY10 YEARS FROM TODAY

Asset Growth Factors for Three Selected Rates of Return

1.344 for 3% 1.629 for 5% 1.967 for 7%

Work-related retirement savings

1

Current $ 

value

(from Worksheet A, 

Column 3)

2

Asset growth factor

(rate of return)

3

Asset value

in 10 years

(Column 1 x Column 2)

401(k) or 403(b)

Keogh

SEP-IRA

SIMPLE IRA

Other

IRAs (traditional) 

IRAs (Roth)

Other

Home equity

Market value of home

Mortgage and liens (enter as 

negative amount)

Personal savings and investments

Other assets (collections, etc.)

TOTAL ASSETS
51

WORKSHEET C

NEW SAVINGS BETWEEN 

NOW AND RETIREMENT

Savings Growth Factors for Three Selected Rates of Return

139.741 for 3% 155.282 for 5% 173.085 for 7%

Work-related retirement savings

1

Estimated 

monthly 

savings 

amount

2

Savings 

growth

factor

3

Value of 

savings

in 10 years

(Column 1 x Column 2)

401(k) or 403(b)

Keogh

SEP-IRA

SIMPLE IRA

Other

IRAs (traditional) 

IRAs (Roth)

Other

Home equity

Market value of home

Mortgage and liens (enter as 

positive amount)

Personal savings and investments

Other assets (collections, etc.)

TOTAL ASSETS
52

INSTRUCTIONS FOR WORKSHEET D

MONTHLY INCOME OVER

A 30-YEAR RETIREMENT

Worksheet D takes your earnings and savings

over a lifetime and projects a monthly income –

the amount you will have to live on – during a 

30-year retirement period. Unlike previous worksheets, this one adds the amount of your Social 

Security benefit and any payout from a traditional 

pension plan. 

 If you have a fixed pension (rather than, or in 

addition to, a 401(k)-type plan), your pension plan 

administrator or union can give you the approximate 

amount of your pension and tell you whether you 

can receive it as a lump sum or as fixed monthly 

payments. If it is a lump sum, enter that amount in 

Column 1 of the worksheet; if you receive it as a fixed 

monthly benefit, fill in only Column 3. 

 For other assets, those you tracked down 
53

WORKSHEET D

MONTHLY INCOME OVER 

A 30 -YEAR RETIREMENT

Income Conversion Factors for Assumed Rates of Interest

0.004216 for 3% 0.005368 for 5% 0.006653 for 7%

1

Accumulated 

assets

(Column 3

from Worksheet B plus 

Column 3

from Worksheet C)

2

Income 

conversion 

factor

3

Monthly 

income 

beginning at 

retirement

(Column 1 x Column 2)

Social Security

Work-Related Retirement Savings

Pension benefits

401(k) or 403(b)

Keogh

SEP-IRA

SIMPLE IRA

Other

IRAs (traditional) 

IRAs (Roth)

Home equity

Market value of home

Mortgage and liens (enter as 

negative amount)

Personal savings and investments

Other assets (collections, etc.)

TOTAL ASSETS
54 55

INSTRUCTIONS FOR WORKSHEET E

MONTHLY EXPENSES

TODAY

Now that you know what your 

savings and investments are, the 

next step is to move on to today’s 

expenses. Worksheet E helps you 

calculate what you spend today. 

Some monthly expenses are 

easy to figure. Others, like a heating 

bill, may not remain the same from 

month to month and will require a 

calculation of your average monthly 

bill over a year’s time. Still other 

bills may arrive only quarterly.

While you may want to guesstimate 

some of these bills the first time 

you fill in the worksheets, you will 

probably want to add more accurate

figures later.

If you are married, include 

your spouse’s expenses; in addition, 

if anyone is financially dependent 

on you, add in those expenses, too.

55

WORKSHEET E

MONTHLY EXPENSES 

TODAY

1

Monthly 

Amount

1

Monthly 

Amount

1

Monthly 

Amount

Housing Loans Health Care (continued)

Mortgage (Including condo fees) 

Rent 

Maintenance

Car

Credit card

Other

Dental

Vision

Noncovered items

Food (at home) Workplace retirement and personal savings Travel/vacations

Utilities Personal Care Entertainment

Electricity

Heat

Internet/cable

Phones

Water/sewer

Hair cut

Dry cleaning

Gym

Other

Eating out

Hobbies

Movies/theater

Charitable contributions

Other

Clothing Transportation Gifts

Membership dues

Taxes Car repairs and maintenance Pet-related costs

Gas

Parking

Public transportation

Real estate

Income (state and federal)

Other property taxes

TOTAL ESTIMATED

MONTHLY EXPENSES

(other than health) Insurance Health Care

House

Life

Car

Disability

Long-term care

Health insurance

Doctor visits

Hospital

Medicine

Over-the-counter medicine

TOTAL ESTIMATED

MONTHLY EXPENSES

(health)
56 57

WORKSHEET F

MONTHLY EXPENSES IN 10 YEARS 

(First year of retirement)

1

Total monthly expenses 

now (from monthly 

expenses column in 

Worksheet E )

2

10-year inflation factor

of 1.3439 (3%)

(except for health care)

3

Total expenses in 10

years adjusted for 

inflation (Columns 1x2)

Housing

Mortgage (Including condo fees) 

Rent

Maintenance

Food (at home)

Utilities

Electricity

Heat

Internet/cable

Phones

Water/sewer

Clothing

Taxes

Real estate

Income (state and federal)

Other property taxes

Insurance

House

Life

Car

Disability

Long-term care

1

Total monthly expenses now 

(from monthly expenses 

column in Worksheet E )

2

10-year inflation factor

of 1.3439 (3%)

(except for health care)

3

Total expenses in 10

years adjusted for 

inflation (Columns 1x2)

Loans

Car

Credit card

Other

Workplace retirement and personal savings

Personal Care

Hair cut

Dry cleaning

Gym

Other

Transportation

Car repairs and maintenance

Gas

Parking

Public transportation

Health Care

Health insurance

Medicare Part B

Medicare Part D

Medicare Part C

Medigap

Doctor visits

Hospital

Medicine

Over-the-counter medicine

For a 9% inflation factor, use 2.3674
58

WORKSHEET F CONTINUED

MONTHLY EXPENSES IN 10 YEARS 

(First year of retirement)

1

Total monthly expenses now 

(from monthly expenses 

column in Worksheet E )

2

10-year inflation factor

of 1.3439 (3%)

(except for health care)

3

Total expenses in 10

years adjusted for 

inflation (Columns 1x2)

Health Care (continued)

Dental

Vision

Noncovered items

Travel/vacations

Entertainment

Eating out

Hobbies

Movies/theater

Charitable contributions

Other

Gifts

Membership dues

Pet-related costs

TOTAL MONTHLY EXPENSES 

ADJUSTED FOR 10 YEARS

INFLATION (other than health)

TOTAL MONTHLY EXPENSES 

ADJUSTED FOR 10 YEARS

INFLATION (health)
59

INSTRUCTIONS FOR WORKSHEET F

MONTHLY EXPENSES IN

10 YEARS

Inflation will increase your expenses, even in the 10 

years between now and retirement. Worksheet F 

helps you calculate how much inflation might affect 

each of the items in the expenses you recorded in 

Worksheet E. In addition, it includes room for some 

new types of health-related expenses many retirees 

are likely to incur in retirement. This chart assumes 

an inflation rate of 3 percent for items other than 

health-related expenses and assumes a 9 percent 

inflation rate for health expenses. 

Note: Many mortgage and some loan payments have 

already taken into account the rate of inflation. If you 

have a fixed mortgage or loan, you will not need to do the 

calculation for this item.
60 61

WORKSHEET G

COMPARING PROJECTED INCOME 

AND EXPENSESARE YOU PREPARED?

1

At retirement

2

Inflation adjusted value factor

(see Clue 3)

3

Value at

retirement for one month

(Column 1 x Column 2)

4

Total value

at retirement

(Column 3 x 360 months)

Total projected income

 Worksheet D, col 3 total 

 

Total projected expenses

 Worksheet F, col 3 total 

 Health

 Other than health

Projected value of income less

expenses

 Subtract line 2 from line 1 

INSTRUCTIONS FOR WORKSHEET G

COMPARING PROJECTED INCOME 

AND EXPENSES

This worksheet compares your anticipated income and 

expenses over the 30 years of your retirement and will reflect 

any shortfall between the two.

Use the total monthly income calculated in

Worksheet D and multiply it by a value adjustment factor you 

select from Clue 3 on page 31. Select the rate of return with 

a 0 percent inflation rate. Then multiply this result by 360 

months and enter that amount in Column 4 of Worksheet G.

This is your total projected income.

Next, record the total monthly expenses calculated 

in Worksheet F. For expenses other than health, choose an 

inflation adjustment value factor from Clue 3 on page 31.

Use the 3 percent inflation rate (used in Worksheet F) or 

select another that you believe will reflect inflation over the 

30 years of your retirement.

For health, use an inflation rate less than 9 percent

(such as 7 percent used in the example on page 29).

Multiply this result by 360 months and enter it in Column 4.

Now subtract the total value of projected expenses (“other 

than health” and “health”) over 30 years of retirement 

in Column 4 from the corresponding total value of your 

projected income (also in Column 4). The result is the 

projected value of income less expenses.
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WORKSHEET H

ADDITIONAL SAVINGS

NEEDED BEFORE RETIREMENT

(IN 10 YEARS)

Additional savings factors: 

0.00716 for 3% 0.00644 for 5% 0.00578 for 7% 

Gap between projected total value of expenses 

and projected total value of income 

 (from Worksheet G) 

1 $

Additional savings factor 2

Additional monthly savings needed 

 (multiply line 1 x line 2) 3 $

 
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INSTRUCTIONS FOR WORKSHEET H

ADDITIONAL SAVINGS

NEEDED BEFORE RETIREMENT

(IN 10 YEARS)

Now you can figure the amount you need to start

to save today to make up for any gap between 

projected income and expenses.

Multiply the gap in Worksheet G by an 

additional savings factor you select from the top of 

Worksheet H, based on the rate of return you 

believe your savings will earn.
December 2014