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To parents who want more money for their retirement and children's college fund...

When it comes to taking care of your retirement and children's college fund, you worry. Will I have enough to help my kids through college? Am I on track to have plenty of money for retirement? These questions plague us like the IRS at tax time.

But did you know there's a tool that will instantly give you the answer to your questions? This tool is the number one thing you need to determine how much to start saving, where to invest and how long it will take you to get there. You'll need it before talking to one Financial Planner or Accountant.

The "Crystal Ball" Of Retirement Planning

If I had one of these babies during math tests, I would've aced them all! Anyone planning for retirement or a child's college fund should use one. It's called a Retirement Calculator. This calculator is not like the ones you're used to. It does more than figure the basics of math. It figures your current income, age, inflation, taxes and many other variables for retirement. Its purpose is to see where you're at financially and how to get where you want to be later in life.

When used properly, this puppy will literally tell you where your finances will be by the time retirement day comes. You'll know exactly how much to start saving so your kids have the dough to hit the books, and you can play golf on the course of your choice.

Love Math or Keep Working

Few of us earthlings love math. It's like catching the flu or spending a night in jail. But that attitude has to die when it comes to your retirement. You either start loving retirement math or you and your kids won't get what you want. Here are some serious benefits of a Retirement Calculator.

Benefit #1: Get On Track
Some of us make plenty of money. But you wouldn't know it. How can someone make $90K a year or more, but not have enough for retirement? The answer is a lack of awareness. We live in a society where you don't have to start thinking about retirement until you're in your fifties. And more "seasoned citizens" are working longer. Part of it is necessity and the other is plain old boredom. You need to start thinking and planning for your children's retirement right now. With a retirement calculator you can see where you're really at. Based on those numbers you can start saving more money in your 401K, IRA or an annuity account. Waiting till the last minute is a sure way to get derailed in the future.

Benefit #2: Dollars and Cents
The right calculator will show you where you need to put more of your money. If mutual funds are on the rise, it's smart to allocate a higher percentage into your 401K. Depending on your investing savvy, you might direct your Account Manager to invest more in commodities. The retirement calculator tells you how much money is needed each month or year, to put more money towards your retirement and college fund. Some of the factors involved are inflation, taxes, employer contributions and more. Once you see where your hard money will be, you can move in the right direction. This can mean the difference between college at USC or a GED for your children.

Benefit #3: Determine Retirement Income
How much money do you want to have for retirement? You can instantly find out what you'll need to outlive your retirement money. Remember inflation? It's the number one thing to factor in next to taxes. I'll show you an example of a Retirement Calculator later on.

Benefit #4: Yearly Investment
Do you know the contribution limits for your 401K or IRA? Once you use the Retirement Calculator will let you see how this can quickly grow for you. If the contribution limits rise during a year, you'll see the short and long term affects on your funds.

Benefit #5: Solving Social Security
Each election cycle we hear about the dreaded perils of Social Security. Will there be enough? Can you solely depend on it for retirement or to help fund that college fund? The answer is no! If you think you can depend on Social Security for retirement, I feel sorry for you.

Other benefits include staying on top of inflation, taxes, contributions and starting a savings plan.

How to See Your Financial Future

Okay, its time to do some math. Here's an Income after Retirement Calculator. You can find one at www.johnhancock.com. And you can use ours at www.retirementcalc.com. We'll pop in some numbers like you and your spouse's age, income, 401K and IRA information. We won't forget those pesky numbers such as taxes and inflation.

Personal Information

Ages: 37 and 35 years
Wages: $40K-$52K per year
Retirement age: 65 and 65
Monthly wages after retirement: $2,500
Years after retirement: 5

Social Security Benefits

Age to receive benefits: 67
Monthly benefits: $1,500
Pension: $1,800

Projections

Inflation expenses: 3%
Yearly rate of growth income: 2%
Age at death: 98
State + federal tax rate before retirement: 33.80%
State + federal tax rate after retirement: 15%

Projected Monthly Living Expenses for Retirement

Initial living expenses
Monthly: $3,000
Years: 15
Intermediate living expenses: $3,400
Remainder of retirement: $2,400

Future One Time Investments

Investment #1
Amount: $10,000
Rate of return: 10%
Years until you invest: 2

Investment #2
Amount: $20,000
Rate of return: 8%
Years until you invest: 6

Monthly Savings (taxable accounts)

Account #1
Balance: $5,000
Rate of return: 4.5%
Monthly investment: $100
Years to start: 3

Account #2
Balance: $5,000
Rate of return: 5%
Monthly investment: $150
Years to start: 3

Monthly Savings (tax-advantaged accounts)

401K: $2,000
Monthly investment: $200
Employer monthly investment: $100
Rate of return: 3%

Roth 401K: $1,500
Monthly investment: $150
Rate of return: 2.5%

Traditional IRA: $8,500
Monthly investment: $200
Rate of return: 8%

Roth IRA: $3,200
Monthly investment: $150
Rate of return: 2.5%

Spouse (tax-advantaged accounts)

401K: $1,000
Monthly investment: $100
Employer monthly investment: $50
Rate of return: 2.1%

Roth 401K: $1,300
Monthly investment: $250
Rate of return: 3.2%

Roth IRA: $2,400
Monthly investment: $110
Rate of return: 2.6%

Once you factor in all these numbers, here's what the John Hancock calculator gives you:

Your income during retirement

The chart shows you where your retirement income will come from. As you can see, your biggest sources will come from fixed income. You need to focus on building up your taxable and tax-deferred income. These include your 401K's and IRA's. If you plan wisely you can roll some of your income into a college 529 plan. You can do this now. Ask your Financial Planner for details.

Be smart and aggressive with your IRA's and 401K's. Your biggest obstacles will be inflation and taxes. Don't let this deter you from calculating and planning wisely.

The John Hancock site has other helpful calculators. Here are just a few.

Lifecycle Retirement Portfolio Probability Calculator
Find out if your money will last through your retirement. It takes into account your model portfolio and other factors.

Yearly Investment Calculator
Do you want to know how much to invest in your 401K or IRA? Let this handy tool show you the way! Don't depend on friends, family or your local barber for this one. Steadily grow your portfolio with the right moves and investment percentages.

Savings Calculator
One of the biggest problems in retirement planning is the savings factor. How much do I really need to save for retirement? Your questions are finally answered here.

Social Security Calculator
Finally, a way to get some real numbers on Social Security and you! No need to wait for the politicos to figure it out. Find out where your money is now and how dependent you'll need to be on Social Security in the future.

Before you visit your Financial Planner or move further with a 401K or IRA, use one or all of these calculators. You can find them at www.johnhancock.com.

Plan wisely and you'll have plenty of funds for retirement and your children's college fund!

Clyde McDade is a Financial Copywriter in the state of Washington. He can be reached at accelcs@comcast.net.

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