Explore your retirement finances in depth.
Our estimates, insights, and resources can help you prepare for retirement and meet with a financial advisor.
Find out if you're on track for retirement
The results provided by the Personal Retirement Calculator (PRC) are intended for illustrative purposes only and accuracy is not guaranteed. The results should not be relied upon nor should they be deemed as investment advice.
IMPORTANT: The projections or other information generated by the Personal Retirement Calculator regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results and are not guarantees of future results. Results may vary with each use and over time.
The Personal Retirement Calculator is provided by one or more third party service providers. However, the information generated by the calculator is developed by Merrill to estimate how current savings and estimated future contributions may help to meet estimated income in retirement. The information estimates potential growth of your indicated assets and contributions over the time frame specified. The market return data used to generate the illustration is hypothetical and intended to provide you with a general idea of how an asset mix you selected might perform over time.
The respective asset mix may be useful information, but is in no way representative of past performance of a particular investment, and is not representative of any future performance of any particular investment. Numerous factors make the calculations uncertain, such as the use of assumptions about hypothetical returns and inflation as well as the data you have provided. Assumptions concerning inflation are for illustrative purposes only. Any asset or portfolio earnings and/or returns shown or used do not reflect the cost of investing, including commissions or fees.
Past performance is not a guarantee of future results.
We encourage you to consult with qualified professionals to discuss your situation.
Bank of America Corporation and its affiliates are not tax or legal advisors. The PRC is not intended to offer any tax, legal, financial or investment advice and does not assure the availability of or your eligibility for any specific product offered by Bank of America Corporation, its affiliates or any other institution, nor does the PRC predict or guarantee the actual results of any investment product. The terms and conditions of products offered by institutions will differ and may affect the results of the calculator. You shall be fully responsible for any investment decisions you make, and such decisions will be based solely on your evaluation of your financial circumstances, investment objectives, risk tolerance, and liquidity needs. Please consult with qualified professionals to discuss your situation.
The Methodology, Assumptions, and Limitations of the Personal Retirement Calculator
Assumptions and Limitations of the Personal Retirement Calculator
- Taxable account gains are taxed at a pre-retirement capital gains tax rate of 20%
- Tax deferred accounts are taxed at a post retirement tax rate of 15%
- Compounding is on an annual basis
- The monthly investment is accumulated and invested at one time at the end of the year
- The annual investment is grown at the salary growth rate in subsequent years
- The accumulation period is computed from the current age until retirement age for simulation purposes (assuming no distributions or withdrawals and that all earnings are reinvested)
- The standard deviation for the generation of portfolio returns is used as the annual risk of the portfolio
- The model assumes you will live to 93 years old unless you input a different number (Range 70-100 years old))
- Average Inflation defaults to 1.99% (Range 0-10%))
- Salary growth rate defaults to 1.99% annually (same as inflation rate, range 0-10%))
- The personal retirement number assumes replacement of 85% (or your selected percentage) of your pre-retirement income before taxes (The range is 50% - 110%)
- Does not assume pension or other retirement income
- Includes Social Security benefits, unless you elect not to include them
- Does not include the value of real estate or real estate income
- Income is assumed to be withdrawn once a year at the beginning of the year starting at retirement
- Does not include expenses, such as long-term care, health care costs, disability, education, alimony or other expenses post-retirement
- The determination for being "on track" is when the total projected asset amount at the desired retirement age and during average market performance is greater than or equal to the personal retirement number.
- The monthly and annual amount you are on track to have is expressed in today's dollars. The total amount you are on track to have is expressed in future dollars at time of initial retirement and is adjusted for salary growth and inflation rate.
Asset Class Assumptions
Our estimates for forward-looking returns for the major asset classes are shown in the table below.
|Average Arithmetic Return||Standard Deviation|
|U.S. Large Cap Growth||10.1%||221.3%|
|U.S. Large Cap Value||10.3%||17.8%|
|U.S. Small Cap Growth||11.9%||24.5%|
|U.S. Small Cap Value||11.5%||21.1%|
|International Developed Equity||7.8%||20.9%|
|U.S. High Yield||5.7%||9.1%|
|International Fixed Income||3.4%%||4.1%|
|U.S. Large Cap Growth||Russell 1000 Growth TR||Russell 1000 Growth Total Return measures the performance of the large-cap growth segment of the U.S. equity universe. It includes those Russell 1000 companies with higher price-to-book ratios and higher forecasted growth values.|
|U.S. Large Cap Value||Russell 1000 Value TR||Russell 1000 Value Total Return measures the performance of the large-cap value segment of the U.S. equity universe. It includes those Russell 1000 companies with lower price-to-book ratios and lower expected growth values.|
|U.S. Small Cap Growth||Russell 2000 Growth TR||Russell 2000 Growth Total Return measures the performance of the broad growth segment of the U.S. equity universe. It includes those Russell 2000 companies with higher price-to-book ratios and higher forecasted growth values.|
|U.S. Small Cap Value||Russell 2000 Value TR||Russell 2000 Value Total Return measures the performance of the large-cap value segment of the U.S. equity universe. It includes those Russell 2000 companies with lower price-to-book ratios and lower expected growth values.|
|International Developed Equity||MSCI Daily TR Net World Ex USA USD||The MSCI World ex USA Index captures large and mid cap representation across 22 of 23 Developed Markets (DM) countries — excluding the United States. The index covers approximately 85% of the free float-adjusted market capitalization in each country.|
|Emerging Markets||MSCI Daily TR Net EM USD||The MSCI Emerging Markets (EM) Index captures large and mid cap representation across 23 Emerging Markets countries and targets coverage of approximately 85% of the free float adjusted market capitalization in each country.|
|U.S. Government||ICE BofA AAA U.S. Treasury/ Agency Master||The BofA US Treasury & Agency Index tracks the performance of US dollar denominated US Treasury andnonsubordinated US agency debt issued in the US domestic market. Qualifying securities must have an investment grade rating (based on an average of Moody's, S&P and Fitch). In addition, qualifying securities must have at least one year remaining term to final maturity, at least 18 months to maturity at time of issuance, a fixed coupon schedule and a minimum amount outstanding of $1 billion for sovereigns and $250 million for agencies.|
|U.S. Mortgages||ICE BofA Mortgage Master||The BofA US Mortgage Backed Securities Index tracks the performance of US dollar denominated fixed rate and hybrid residential mortgage pass-through securities publicly issued by US agencies in the US domestic market. 30-year, 20-year, 15- year and interest-only fixed rate mortgage pools are included in the Index provided they have at least one year remaining term to final maturity and a minimum amount outstanding of at least $5 billion per generic coupon and $250 million per production year within each generic coupon.|
|U.S. Corporates||ICE BofA U.S. Corp Master||The BofA US Corporate Index tracks the performance of US dollar denominated investment grade corporate debt publicly issued in the US domestic market. Qualifying securities must have an investment grade rating (based on an average of Moody's, S&P and Fitch), at least 18 months to final maturity at the time of issuance, at least one year remainingterm to final maturity as of the rebalancing date, a fixed coupon schedule and a minimum amount outstanding of $250 million.|
|U.S.High Yield||ICE BofA High Yield Cash Pay||The BofA US Cash Pay High Yield Index tracks the performance of US dollar denominated below investment grade corporate debt, currently in a coupon paying period that is publicly issued in the US domestic market.|
|International Fixed Income||ICE BofA Global Broad Market TR ex USD (Hedged))||The BofA Global Broad Market Excluding US Dollar Index tracks the performance of investment grade debt publicly issued in the major domestic and eurobond markets, including sovereign, quasi-government, corporate, securitized and collateralized securities, excluding all securities denominated in US dollars.|
|ICE BofA U.S. Treasury Bill 3 months||ICE BofAUS 3-Month Treasury Bill Index is comprised of a single issue purchased at the beginning of the month and held for a full month. At the end of the month that issue is sold and rolled into a newly selected issue. The issue selected at each monthend rebalancing is the outstanding Treasury Bill that matures closest to, but not beyond, three months from the rebalancing date. To qualify for selection, an issue must have selected on or before the month-end rebalancing date.|
Model Portfolio Hypothetical Risk/Return
Exhibit 1: Hypothetical Annual Arithmetic Expected Returns and Standard Deviations
|Conservative||Mod. Conservative||Moderate||Mod. Aggressive||Aggressive|
|US Large Cap Growth||7%||12%||17%||21%||25%|
|US Large Cap Value||8%||15%||19%||24%||28%|
|US Small Cap Growth||1%||1%||2%||2%||3%|
|US Small Cap Value||1%||1%||2%||2%||3%|
|International Fixed Incomek||9%||7%||2%||1%||0%|
|Hypothetical Annual Expected Return||5.2%||6.4%||7.4%||8.2%||9.1%|
|Hypothetical Annual Risk||5.6%||8.3%||11.0%||13.8%||16.4%|
Personal Retirement Number
Length of Savings
Action Plan – Increase in Monthly Contributions
No Guarantee of Results
If you have other assets, income, and investments that are not included in this analysis, they will not factor into any of the analysis or results. In applying this information to your individual situation, you should consider all of your assets, income, and investments, including those that are not taken into account in this analysis.