This financial tool is designed to project the future value of an individual’s retirement savings within a self-employed 401(k) plan. It factors in variables such as current savings, contribution amounts, investment returns, and time horizon to estimate the potential balance at retirement. For example, an individual can input their current savings, planned contribution percentage, anticipated rate of return, and desired retirement age to receive a projection of their potential retirement funds.
Understanding potential retirement savings is crucial for financial planning. By providing insights into the impact of contribution amounts and investment strategies, it aids in making informed decisions about retirement goals. Historically, individuals relied on manual calculations or sought professional advice to estimate retirement savings; this tool democratizes access to these projections and empowers individuals to take control of their retirement planning.