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Retirement: Focus on Contributing, Not on the Market

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I like spending a few minutes (but not much more) plugging in hypothetical numbers into interactive calculators like this retirement income calculator (Java required). This calculator displays how much monthly retirement income you can expect with assumptions about market return, tax bracket, and contributions.

This morning, I spent a few seconds exploring a few scenarios. It’s interesting that while the market rate of return is an important factor, changes in that variable don’t affect the outcome as much as similar changes in the dollar amount of annual contributions.

This year, I’m contributing the maximum to my Roth IRA and 16% of my day-job income to my 401(k). I’ll also contribute some portion to a tax-deferred SEP IRA, but I’m not sure how much. I still have more than 30 years to go until the standard retirement age, so the more I pile the contributions on now, the less I’ll have to worry in the future… if I make it that long.

Updated December 20, 2011 and originally published March 20, 2007. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.

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About the author

Luke Landes is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about Luke Landes and follow him on Twitter. View all articles by .

{ 4 comments… read them below or add one }

avatar John

That is a good site. The calc is usefull and accurate (which, unfortunately, is not the norm). The fact that it pre=populates it with a 10% return is a little off.

Thanks for the link!

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avatar Luke Landes

John: One of the first things I did was change the market return assumptions to 8% pre-retirement and 6% post-retirement.

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avatar Bobby

“It’s just so optimistic of you Harry.”

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avatar Marshall Middle

That’s for pointing out the useful calculator. Is there ever a point where you feel like you’re saving too much for retirement?

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