1. What is Retirement Income Gap?

Retirement income gap refers to the difference between the income seniors require to maintain their desired standard of living in retirement and the income they actually expect to receive from various sources such as pensions, Social Security, and investments.

2. How Does the Calculator Work?

The calculator uses the simple formula:

Where:

• Required Income — The annual income needed to maintain desired lifestyle in retirement
• Expected Income — The annual income expected from all retirement sources

Explanation: A positive gap indicates insufficient retirement income, while a negative gap means income exceeds requirements.

3. Importance of Retirement Income Gap Calculation

Details: Calculating retirement income gap is crucial for financial planning, helping seniors identify potential shortfalls and make necessary adjustments to their retirement strategy, savings, or spending plans.

4. Using the Calculator

Tips: Enter both required and expected income in the same currency per year. Use realistic estimates based on current expenses and expected retirement income sources.

5. Frequently Asked Questions (FAQ)

Q1: What should be included in required income?
A: Include all essential living expenses (housing, food, healthcare) plus discretionary spending for desired lifestyle.

Q2: What sources contribute to expected income?
A: Include Social Security benefits, pension payments, retirement account withdrawals, investment income, and any part-time work income.

Q3: How often should I recalculate my retirement income gap?
A: Annually, or whenever there are significant changes in income, expenses, or financial circumstances.

Q4: What if my gap is positive (income shortfall)?
A: Consider strategies like working longer, reducing expenses, increasing savings, or adjusting investment strategies.

Q5: Does this calculator account for inflation?
A: No, users should use inflation-adjusted figures for both required and expected income for accurate long-term planning.