How Much Do I Need for Retirement? What a Retirement Calculator Can Tell You


“‘How much do I need for retirement?’ is a loaded question, and the answer is different for everybody,” says Alex Queen, VP of Service for Fisher Investments 401(k) Solutions. “Retirement income calculators are meant to provide users with a snapshot of what their retirement savings might look like if they follow their current path. Unfortunately, the key piece that most users are missing is an experienced retirement professional who can advise them on how to best take advantage of these planning tools.”

This is especially true for employees of small businesses, who make up about one-third of all U.S. workers.1 Small businesses don’t tend to receive the level of employee support—particularly educational services—that larger businesses receive. Employees of small businesses are about 25% less likely to have access to online tools like 401(k) calculators from their service provider, and 30% less likely to have access to informational seminars, meetings, or workshops.2

“Access to a retirement income calculator may not necessarily help someone who isn’t sure what their rate of return on their investments might be, or how to calculate their projected social security income, for instance,” says Queen. “That’s why having a professional who will sit down one-on-one and walk you through them is so important. Retirement calculators can help you set your expectations, and give you an idea of where you might need to change your saving or investment strategy.”

Small businesses may receive less service than larger businesses for a variety of reasons. Most of a small business’s 401(k) expense may be spent on paying various plan fees that don’t include service, or their 401(k) provider may charge more for investments, leaving little room to budget for additional support. More likely, the 401(k) provider may not be suited to serve small and mid-size businesses specifically—or those providers may simply ignore smaller plans in favor of their “big fish.”

401k Calculator Graphic


While retirement calculators or 401(k) calculators might not be 100% accurate, there are a couple things that will provide a clearer picture of an employee’s retirement strategy:

  • Use a calculator with adjustable variables. Of the complaints that retirement calculators usually receive, most typically revolve around an inability to alter things like inflation rate, percentage of income needed in retirement, and annual rate of return on investments, for example. This allows you to make several projections based on changes you might be able to expect in life—like if you are able to save more each year than you initially expect. And for younger employees, even a slightly different savings rate can mean a change of several thousand dollars after 30 years of investing.
  • Ask your 401(k) service provider for support. Find out what kind of employee support services your provider offers free of charge—they may charge for sitting down one-on-one, which is where your employees may receive the most value from the expertise of the retirement adviser. If this is the case, ask how you can alter your current plan to provide that service for employees without paying more. And if it’s not possible, or your efforts are getting nowhere, it may be time to consider a new service provider.

Next time you sit down to use a retirement calculator, remember that they’re best utilized as a “snap-shot” of what your current path to retirement looks like. Find a calculator that allows you to update different variables so you can see the impact of different choices on your retirement readiness and talk to your 401(k) service provider to get an industry perspective on those inputs.


1 U.S. Small Business Administration Office of Advocacy.

2 2017 Transamerica Center for Retirement Studies Employer Survey

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