A successful savings strategy starts with understanding your financial needs. Use our calculator to estimate how much of your salary you might be able to replace at retirement and how much more you may need to save to reduce any potential shortfall. Need Help? Schedule a consultation with a TIAA consultant to create a personalized plan.
The Retirement Goal Evaluator facts and assumptions are used to calculate the participants accumulation at retirement date to determine if the participant will hypothetically achieve the desired replacement ratio at a specific retirement age. This calculation is done based on your inputs (e.g., current age, planned retirement age, current annual salary, annual salary growth rate, salary replacement target, defined benefit plan amount, your and your employer’s contribution rate, selection of joint or single lifetime annuity option and guarantee period, social security, current accumulations and earning rate during accumulation) and the hypothetical assumptions regarding a fixed annuity.
The Retirement Goal Evaluator uses your inputs (current age, planned retirement age, current annual salary, annual salary growth rate, your and your employer’s contribution rate or amount, current accumulations and earning rate during the accumulation phase) to calculate the participant’s accumulation at the planned retirement. The accumulation is the future value of the dollar amount of the current accumulations you entered, as well as the dollar amount of you and your employer’s contributions (adjusting for user entered annual salary growth) invested at the hypothetical earnings rate you entered for the time period defined as the number of years between your entered current age and your entered retirement age (contributions and compounding made annually). At your entered retirement age, the tool then turns this hypothetical accumulation into a fixed annuity income stream (calculated based on your selection of joint or single lifetime annuity option and guarantee period). To do this, the tool divides your accumulated balance by an annuity factor. An annuity factor is the amount needed today to generate $1 of periodic income for life and is calculated based on interest rate expectations and the probability (likelihood) of living determined from mortality tables. This tool uses a 4% interest rate assumption and current TIAA mortality. TIAA uses a mortality table based on a merged gender modification to the Annuity 2000 Mortality Table (a table that was developed by the Society of Actuaries). TIAA makes additional adjustments to its mortality assumptions to better reflect characteristics of our participants based on our experiences. Example: Let’s say for a 65 year old, with current TIAA mortality assumptions and 4% interest, the monthly annuity factor for a single life annuity with no guarantee period is 176.01186. Annuitizing $100k will result in an initial payment of $568.14 per month ($100,000 / 176.01186).
Please note that the actual annuity factor will also depend on the frequency of income payments (monthly, quarterly, semi-annually, annually) selected at annuitization (this tool assumes an annual frequency). The tool then combines the annuity income with any other income amounts you selected (defined benefit plan amount, social security) to determine if you will hypothetically achieve the entered replacement ratio at the entered retirement age and expresses it as an annual income number. This annual income number is then compared against the percent of salary multiplied by your hypothetical salary at your entered retirement age, adjusted for your entered annual salary growth rate. If you are projected to fall short of your goal, the tool will also tell you how much more you may have to invest to reach your goal.
You should not view or construe the tools and information as a suggestion that you take or refrain from taking a particular course of action, as the advice of an impartial fiduciary, or as an offer to sell or a solicitation to buy any securities or other investment property. In making the tools and information available to you, we assume that you are capable of evaluating the information and exercising independent judgment. You should not buy or sell any security or other investment property without first considering whether it is appropriate for you based on your own particular situation. TIAA will not perform any suitability or other analysis to check, for example, whether a security or other investment property you select is consistent with your investment objectives. The information derived from this tool is for illustrative purposes only. The purpose of the tool is not to predict future returns, but to be used as an educational tool. The Retirement Goal Evaluator does not include or identify any specific investment alternative or distribution option available under the plan or IRA. This tool does not consider your complete financial situation and needs, or every factor you may wish to consider in making this determination, such as other assets, the need to pay down debt, other retirement accounts and contributions, your liquidity needs, and other financial considerations. You should not rely on this tool as the sole source of making any financial decisions. All material facts and assumptions (e.g., retirement ages, income levels, financial resources, rates of return, and other features) are specified by the plan participant, beneficiary, or IRA owner. Contact your tax advisor regarding the tax implications. You may also contact TIAA at 800-842-2252. We are here to help.