How to Calculate Retirement Income Gap
What is Retirement Income Gap?
Calculates the retirement savings shortfall or surplus between projected needs and available resources.
Formula
Gap = Total Retirement Needs - (Savings + Social Security + Pensions)
Step-by-Step Guide
- 1Estimate annual retirement expenses
- 2Input years in retirement
- 3Account for inflation and investment returns
Worked Examples
Input
$60k annual need, 30 years, 3% inflation, $500k saved, 4% withdrawal
Result
Gap analysis shows adequate/shortfall
Comprehensive retirement planning
Common Mistakes to Avoid
- ✕Not adjusting expenses for inflation
- ✕Overestimating safe withdrawal rates
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