Savings Taxes Inflation Calculator: Determine What Impact They Can Have on Your Savings
Savings, Taxes, and Inflation Calculator
Savings and Investments:
How will taxes and inflation affect your savings and investments? Use this calculator to determine how much your savings and investments will be worth with this in mind. Click the "View Report" button to get more information and a year-by-year savings schedule. Use this calculator in conjunction with the CD calculator to determine your best savings strategy.
Savings, Taxes, and Inflation Calculator - Definitions
The purpose of the Savings, Taxes, and Inflation calculator is to determine what your savings and investments will be worth taking into consideration taxes and inflation. To use this calculator you will need to enter the number of years you want to look at, your monthly contributions or savings, current investments, expected rate of return, expected inflation rate, and your expected federal and state tax rate. The calculator will use this information to create a snapshot of how your savings and investments will perform over the years before and after taxes and inflation are taken into consideration.
Years - The number of years you have to save.
Monthly savings contributions - The amount you will contribute each month to your savings and investments . This finance calculator assumes that you make your savings contribution at the beginning of each month.
Amount currently invested - Total you have saved --
savings and investments
-- to date to be included in this analysis.
Expected rate of return - This is the annually compounded rate of return you expect from your savings and investments before taxes. The actual rate of return is largely dependant on the type of investments and savings you select. From January 1970 to December 2007, the average compounded rate of return for the S&P 500, including re-investment of dividends, was approximately 11.4% per year. During this period, the highest 12-month return was 61%, and the lowest was -39%. Savings accounts at a bank can pay as little as 1% or less.
It is important to remember that future rates of return can't be predicted with certainty and that investments that pay higher rates of return are generally subject to higher risk and volatility. The actual rate of return on investments and savings can vary widely over time, especially for long-term investments. This includes the potential loss of principal on your investment. It is not possible to invest directly in an index and the compounded rate of return noted above does not reflect sales charges and other fees that funds and/or investment companies may charge.
Federal tax rate - Your marginal federal tax rate.
State tax rate - Your marginal state tax rate.
Expected inflation rate - What you expect for the average long-term inflation rate. A common measure of inflation in the U.S. is the Consumer Price Index (CPI), which has a long-term average of 3.1% annually, from 1925 through 2007. The CPI for 2007 was 2.4%, as reported by the Minneapolis Federal Reserve.