**A reader Paul recently asked me**, *“I struggle with your 401k calculator. I am trying to determine how much I need in my 401k before I can retire, and how much I should be putting in to my 401k before I retire to achieve that amount. Your spreadsheet columns don’t seem to give that info. What am I missing?”*

(You can find my online retirement calculator here.)

**First off Paul, you’re correct, this calculator only tells you what you will need to save in total to achieve your retirement objectives.** *You will have to take that total amount and work backwards to determine how much you will need to be saving every paycheck to meet those goals.* Moreover, you will have to determine if your goal is even realistic.

**It’s easier if I give you an example.**

Let’s say Paul is currently 30 years old and makes about $100,000 per year. Let’s say Paul wants to have the same income level in retirement as he does now (even though he will have his home paid off, he wants to use the extra money for traveling the world), see below for the assumptions used.

Now, after you’ve adjusted the assumptions and pressed the button to calculate, you will see results as shown below.

**The above highlighted numbers represent the amount of money in today’s dollars** that you will need to have accumulated by the time you retire.

**You have to take this one step further to determine how much every month you will need to sock away to meet that goal, by using a future value calculator.** Let’s say Paul’s goal was the $4,501,728 above . I found this nifty future value calculator to help determine how much he would need to put away each month. I simply input Paul’s starting funds of zero, assumed a 10% rate of return, 35 years for the time he will be investing (he wants to retire at 65 and he is 30 now, so 65-30=35), and I entered his goal of $4.5 million, then I pushed calculate. The answer “**You should deposit $1,185.26 monthly to reach your savings goal.” **

Hopefully, socking aside nearly $1,200 a month is realistic for Paul, if not, it’s time for him to be more realistic about his retirement goals. Maybe he would be able to live off of less income than he has now, so he can adjust his goals down to 75% of what he makes now. **It’s critical to set realistic and challenging goals.**

**I hope this helps Paul!
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