If you have a retirement plan or plans, you probably want to know what you can expect from it when you retire. There are many variables depending on the type of plan you have and company you have it through. But here are some ideas to help you figure out what you can expect when you retire.
Probably the best place to help you figure out what to expect is your plan provider. Don't forget that this is your money. Don't be afraid to ask them for some estimates for when you retire. They should be able to explain to you about what you have in your account and how that is expected to paid out to you when you retire.
If you have a defined contribution plan, your retirement is based more on how much you contribute and the market conditions. Your employer doesn't guarantee you a set amount when you retire. Because it depends on actions outside of your employer's control, you probably won't get as detailed an answer as you would with a defined benefit plan. One of the things you can do is plug your numbers into a retirement calculator to figure out what you should have. Motley Fool has a nice calculator to help you determine how much your savings will be worth when you retire. leadfusion.com
If you have a defined benefit plan, then you really need to get your plan provider involved. They will have the specific calculations that your particular plan uses at retirement. You should be able to sit down with them, either in person or over the phone, and get answers to several different scenarios. Not only can the employer use their own formulas (within reason) to determine payout, but you should have several options to choose from as well. That makes calculating your benefits from a defined benefit somewhat confusing.
If you want a rough estimate, you can use the same calculator that you would use for a defined contribution plan. At least you'll have some idea of what to expect.
When most people are trying to calculate their pension fund information, they're really trying to get an idea of how much they'll have during retirement. Don't forget to add in items like Social Security. The Social Security Administration sends out an annual statement that tells you how much you can expect at various ages of retirement. Don't forget to check your income that's also reported on this statement. Because your retirement income is based on your most recently reported income amounts, you want to make sure this is correct. Errors have been known to happen.
Whether you have a few months, a few years or a few decades until you retire, it is a great idea to review this information regularly. Not only does it keep you informed of where you are currently, it can help you see where you may need to contribute more. For most plans these days, you - the employee - have a much greater amount of control than you used to. Take advantage of that and maximize your potential to save now. You can thank yourself later.