The form also asks for the benefits you anticipate receiving from other sources, such as your 401(k), 403(b), IRA, etc. So, dig into that shoebox or filing cabinet and get out the latest statements. Or, if you track these figures on your PC through Quicken, Microsoft Money, or another software program, boot up.
And, you'll need to total up the value of what you've saved. Don't be embarrassed if you haven't saved a fortune. The critical point is to gather the facts. This includes:
5) YOUR HOUSE
Finally, THE BALLPARK ESTIMATE wants to know how much equity you have in your house. That's because when you retire, you may decide to downsize -- to sell your house and move to a less expensive one or into a retirement community. On the other hand, you may decide to stay right where you are and tap into the value of your property through a reverse mortgage.
$TIP: For unbiased information on reverse mortgages, check out National Center for Home Equity Conversion (www.reverse.org), HUD (www.hud.gov/rvrsmort.html) and the Federal Trade Commission (www.ftc.gov). On the FTC site, type in "reverse mortgage" in the search box.
THE RESULTS
After you enter these figures on the Ballpark Estimate form, a dollar amount will pop up on the final line. This is the amount you will need to save each year in order to accumulate 70% of your current annual gross income when you retire. The dollar amount is based on how long you have until retirement -- 10, 15, 20, 25, 30, 35 or 40 years -- using an annual inflation rate of 3%.
YOUR FINAL ANSWER, PLEASE
The Ballpark Estimate, as it name implies, is just an estimate; it is not the final answer, but it is a good beginning.
Now that you're found all your relevant papers and have become involved in the planning process, you may become intrigued enough that you'll want to get answers to more complicated questions. In the next sections of this RETIREMENT GUIDE we will cover:
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